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Question
Which of the following statements with respect to floating-rate debt is incorrect?
A. If the market rate of interest increases, the market value of the floating-rate debt will remain the same.
B. If the market rate of interest decreases, the cash interest payment required by the issuing company would decrease.
C. If the market rate of interest increases, the investors benefit while the issuing corporation does not benefit.
D. If the market rate of interest decreases, both the issuing company and the investors benefit.
Answer
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