Which of the following best defines a floating-rate bond?
Which of the following best defines a floating-rate bond?
[A]A bond with a fixed interest rate and has better yield than varying interest rate bond
[B]A bond with a fixed interest rate and has lower yield than varying interest rate bond
[C]A bond with a varying interest rate and has better yield than fixed interest rate bond
[D]A bond with a varying interest rate and has lower yield than fixed interest rate bond
A bond with a varying interest rate and has lower yield than fixed interest rate bond
Floating rate bonds have variable interest rate and protect investors against a rise in interest rates (which have an inverse relationship with bond prices). They also carry lower yields than fixed notes of the same maturity.
Originally written on
December 8, 2014
and last modified on
December 8, 2014.