In General,floating Rate Bonds Have Their Interest Rate Payment Adjusted

question 30

Multiple Choice

In general,floating rate bonds have their interest rate payment adjusted:

• A) daily.
• B) weekly.
• C) quarterly.
• D) annually.

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Definitions:

Present Valued Dollar

The current value of a future sum of money or stream of cash flows given a specified rate of return.

Internal Rate of Return

A financial metric used to evaluate the profitability of potential investments, calculated as the rate of return that makes the net present value of all cash flows from a particular project equal to zero.

Reinvestment Assumption

The premise in finance that cash flows received from an investment will be reinvested at a certain rate, affecting future cash flows and the overall return.

Cost of Capital

The rate of return that capital could be expected to earn in an alternative investment of equal risk.