Which of the following risk(s) is/are Floating-rate bonds designed to minimise?
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.
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Alloy A contains iron and copper in ratio 4:5. Alloy B contains iron and copper in ratio 3: 4. If 63kg of alloy A and 56 kg of alloy B are mixed, then w...
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Ramu has lent Rs. 60,000 to Murali and Bansi at 7% p.a. and at 11% per annum respectively. At the end of the year, he has gained an overall interest at ...
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A shopkeeper has 78 kg rice a part of it, he sells at the profit of 26% and rest at loss of 13% and he get the loss of 9% so what is the quantity sold a...
Cost of two types of pulses is Rs.12 and Rs, 17 per kg, respectively. If both the pulses are mixed together in the ratio 2:3, then what should be the pr...