A Reverse Floater Is Riskier Than a Regular Bond Because

question 87

Multiple Choice

A reverse floater is riskier than a regular bond because:

• A)When interest rates rise, the price of a regular bond drops by more
• B)When interest rates fall, the price of a regular bond drops by less
• C)When interest rates rise, the price of the reverse floater drops by more
• D)When interest rates fall, the price of the reverse floater drops by more

---

Definitions:

Factory Overhead

The indirect costs associated with manufacturing, not directly tied to specific units produced, such as maintenance, utilities, and management salaries.

Continuous Flow

A production process where products move continuously through a series of operations, reducing wait times and inventory levels.