Floating-rate debt is advantageous to investors because the interest rate earned on the debt increases when market rates rise.

Question

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Floating-rate debt is designed to have a variable interest rate that adjusts periodically based on a benchmark rate, such as the London Interbank Offered Rate (LIBOR). When market rates rise, the interest rate on floating-rate debt increases, resulting in higher returns for investors. Therefore, it is advantageous to investors.

Floating-Rate Debt Is Advantageous to Investors Because the Interest Rate