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Which of the Following Are Common Characteristics of Floating-Rate Bonds

question 119

Multiple Choice

Which of the following are common characteristics of floating-rate bonds?
I.adjustable coupon rates
II.adjustable maturity dates
III.put provision
IV.coupon cap


Definitions:

Interest Rate Collar

A risk management strategy used to limit exposure to interest rate fluctuations by setting upper and lower bounds.

Risk Exposure

Risk exposure is the measure of potential future losses that may result from business activities or investment decisions, due to risks that have been taken.

Variable-Rate Loan

A loan in which the interest rate can change over time, based on an underlying benchmark interest rate or index.

Interest Rate Cap

A financial derivative contract that limits the maximum interest rate a borrower has to pay on a variable-rate loan.

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