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

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Definitions:

Net Income Attributable

The portion of net income (profit) that is available to the shareholders, after accounting for dividends to preferred stockholders and other adjustments.

Noncontrolling Interest

A stake in a company that is less than 50%, implying that the holder does not have control over the company's operations.

Equity Method

The equity method is an accounting technique used to record investments in associate companies where the investor has significant influence but does not control the company outright, typically identified by owning 20-50% of the voting stock.

Deferred Intra-entity

Pertains to transactions between entities within the same company that are not settled immediately but are recorded and settled at a later date.