Multiple Choice QuestionBonds that do not have a fixed interest rate, but rather have a rate that changes with the current rates, are called ______.Multiple choice question.floating-rate bondsserial bondsjunk bondsunsecured bonds
Question
Multiple Choice QuestionBonds that do not have a fixed interest rate, but rather have a rate that changes with the current rates, are called ______.Multiple choice question.floating-rate bondsserial bondsjunk bondsunsecured bonds
Solution
The correct answer is "floating-rate bonds".
Step by Step Explanation:
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Floating-rate bonds: These are bonds that do not have a fixed interest rate. Instead, the interest rate on these bonds changes in line with current market rates. Hence, this is the correct answer.
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Serial bonds: These are bonds that mature in installments over a period of time. The interest rate on these bonds is usually fixed.
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Junk bonds: These are high-risk bonds that offer high yields. They are called junk bonds because of their high default risk. The interest rate on these bonds is usually fixed.
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Unsecured bonds: These are bonds that are not backed by any physical assets or collateral. The interest rate on these bonds is usually fixed.
Therefore, the bonds that do not have a fixed interest rate, but rather have a rate that changes with the current rates, are called floating-rate bonds.
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