The Motivation for Floating Rate Bonds Arose Out of the Costly

question 73

True/False

The motivation for floating rate bonds arose out of the costly experience of the early 1980s when inflation pushed interest rates to very high levels causing sharp declines in the prices of long-term bonds.

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Definitions:

Legislative Regulations

Laws and rules enacted by a legislative body to govern behavior and procedures.

Temporary Regulations

Regulations issued by the IRS or other government agencies that are intended to be in effect for a limited period of time, often used to clarify or interpret tax laws.

Tax Liability

The total amount of tax owed to a tax authority by an individual or corporation after all deductions, credits, and exemptions.

Income Tax Withholdings

The portion of an employee's income that is withheld by the employer and paid directly to the government as a prepayment of income tax.