Which of the Following Statements Is True of Floating-Rate Bonds

question 57

Multiple Choice

Which of the following statements is true of floating-rate bonds?

• A)They are also called serial bonds.
• B)They offer interest payments much above the prevailing rates.
• C)They do not have fixed interest payments.
• D)They have progressively longer maturity.
• E)They are often associated with startup firms with limited track records.

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Definitions:

Useful Life

The estimated duration an asset is expected to be functional and useful before it needs to be replaced or becomes obsolete.

Operating Cost

Expenses associated with the day-to-day functions of a business excluding cost of goods sold, such as rent, utilities, and payroll.

Value-Based Pricing

A pricing strategy where the price of a product or service is determined based on the perceived value to the customer rather than the cost of production.

Required Return

The minimum expected return by investors for investing in a particular security or project, reflecting the risk level.