Floating-rate debt is the most common method for lenders to protect themselves from losses that arise as a result of increases in the market interest rate.

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Floating-rate debt, also known as variable-rate debt, is designed to adjust the interest rate based on changes in the market interest rate. This protects lenders from losses that could occur if the market interest rate rises, as the interest rate on the loan will also rise. Therefore, floating-rate debt is a common method for lenders to protect themselves from market risk.

Floating-Rate Debt Is the Most Common Method for Lenders to Protect