Rate on debt that increases as soon market rises is classified as________?
Correct answer: B. Floating rate debt
- A. Rising bet rate
- B. Floating rate debt
- C. Market rate debt
- D. Stable debt rate
Explanation
A floating-rate debt instrument has an interest rate that resets with a reference market rate, so its rate can rise when market rates rise. A stable or fixed-rate debt does not adjust in this way.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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