Which of the Following Types of Bonds Protects a Bondholder

question 47

Multiple Choice

Which of the following types of bonds protects a bondholder against increases in interest rates?

• A)Floating-rate bonds
• B)Income bonds
• C)Bonds with call provisions
• D)Municipal bonds
• E)Mortgage bonds

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Definitions:

Capital Asset

Any type of asset that is held for investment or for personal use, including stocks, bonds, real estate properties, and collectibles, among others.

Taxpayer

An individual or entity legally obligated to pay taxes to a governmental authority, such as the IRS.

Section 1231

A tax provision that allows for the favorable tax treatment of gains on the sale or exchange of certain types of property used in a business.

Trade or Business

An activity carried out for the purpose of earning income or profit, involving regularity and continuity in operations.