The Desire for Floating-Rate Bonds, and Consequently Their Increased Usage

question 85

True/False

The desire for floating-rate bonds, and consequently their increased usage, arose out of the experience of the early 1980s, when inflation pushed interest rates up to very high levels and thus caused sharp declines in the prices of outstanding bonds.

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Definitions:

Series Circuit

An electrical circuit in which components are connected in a linear sequence, ensuring the same current flows through all components.

Applied Voltage

The voltage that is externally applied to an electrical component or circuit, influencing its operation or behavior.

Total Resistance

The sum of all resistances in an electrical circuit, influencing the overall current flow.

Ohm's Law

A fundamental principle stating that the current through a conductor between two points is directly proportional to the voltage across the two points, given the resistance remains constant.