A Corporation Is More Prone to Issue flOating-Rate Bonds When

question 144

Multiple Choice

A corporation is more prone to issue floating-rate bonds when they expect future interest rates to _____ over the life of the bond.

• A) Remain constant.
• B) Increase briefly and then decline slightly.
• C) Continually decline.
• D) Decline briefly and then increase significantly.
• E) Continually increase.

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Definitions:

Semiannual Interest

Semiannual Interest refers to interest that is calculated and paid twice a year, commonly found in bonds and other types of loans.

Fiscal Year

A one-year period that companies and governments use for financial reporting and budgeting, which may not coincide with the calendar year.

Accrued Interest

The interest that has been incurred but not yet paid on a loan or bond.

Fiscal Year

A 12-month period used for accounting and financial reporting purposes, which may or may not align with the calendar year.