CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

When a company has floating-rate debt, it periodically revalues its debt for changes in the market rate of interest. True or False?
Correct Answer: False

Since the contract interest rate of floating-rate debt changes as the market rate changes, the book value of the debt is always exactly equal to its market value. Also, under GAAP, firms may not make entries to change the value of any type of debt due to changing interest rates.

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