Floating-Rate Bonds Are Designed to ___________, While Convertible Bonds Are

question 66

Multiple Choice

Floating-rate bonds are designed to ___________, while convertible bonds are designed to __________.

• A) minimize the holders' interest rate risk; give the investor the ability to share in the price appreciation of the company's stock
• B) maximize the holders' interest rate risk; give the investor the ability to share in the price appreciation of the company's stock
• C) minimize the holders' interest rate risk; give the investor the ability to benefit from interest rate changes
• D) maximize the holders' interest rate risk; give investor the ability to share in the profits of the issuing company
• E) None of the options are correct.

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Definitions:

Autonomous Consumption

Consumer spending that does not depend on current income, influenced instead by factors like wealth and basic needs.

Autonomous Consumption

The level of consumption that occurs when income is zero, representing the expenditures needed to meet basic needs.

Disposable Income

The available sum for households to allocate on spending and saving post the deduction of income taxes.

Consumption

The use of goods and services by households, including both durable and non-durable goods.