Question
Which of the following risk(s) is/are Floating-rate
bonds designed to minimise?Solution
Floating Rate Bonds (FRBs) are bonds that have a variable coupon, equal to a money market reference rate (like MIBOR or LIBOR) plus a quoted spread (i.e., quoted margin). · Floating rate bonds allow the investor to earn a rate of interest income tied to current interest rates. As such, FRBs carry little interest rate risk. · Its price shows very low sensitivity to changes in market interest rates. When market rates rise, the expected coupons of the FRB increase in line with the increase in forward rates, which means its price remains constant. Thus, FRBs differ from fixed rate bonds, whose prices decline when market rates rise. · As FRBs are very less sensitive to interest rate risk, they are considered conservative investments for investors who believe market rates will increase.
Statements: Only boys are girls.
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In the question below some statements are given followed by three conclusions I, II, and III. You have to take the given statements to be true even if ...
Statements: All books are pages.
Some notes are books.
All assignments are notes.
. Conclusions: I. At least some pages are not b...
Statements:
A few Platform are Train
Only a few Train are SUV
Only Car are Bus
No SUV are Car
Conclusions:
I. ...
- Read the given statements and conclusions carefully. Assuming that the information given in the statements is true, even if it appears to be at variance wi...
Statements:
All Water are Tea.
No Tea is Coffee.
Some Coffee are Milk.
Conclusions:
I. No Water is Milk.
II. S...
Statements :All blues are whites.
Some whites are reds.
All yellows are reds.
Conclusions :I. Some reds are whites.
II. Some yellows are whites.
Statement:
All badmintons are rackets.
Some rackets are rubbers.
No rubber is a string.
Conclusion:
I. Some strin...
In the question below there are four statements followed by three conclusions I, II and III. You have to take the three given statements to be true ev...
Read the given statements and conclusions carefully. Assuming that the information given in the statements is true, even if it appears to be at varianc...
