Floating-Rate Bonds Have Adjustable Rates to Protect Real Rates of Return

question 99

Multiple Choice

Floating-rate bonds have adjustable rates to protect real rates of return against inflation. The rates paid are limited by:

• A) The put provisions of the issues
• B) A floor rate which sets the minimum
• C) A cap rate which sets the maximum
• D) B and C

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Definitions:

Proactive Interference

A phenomenon where old information hinders the recall or learning of new information.

Source Amnesia

The loss of memory regarding the specific context, including the place, time, or manner in which certain knowledge was gained, despite retaining the facts themselves.

Imagination Inflation

The increase in confidence that an imagined event actually occurred, due to the imagining of the event.

Misinformation Effect

A phenomenon where one's recall of episodic memories becomes less accurate due to post-event information.