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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.
A Gini coefficient exceeding 0.40 typically indicates which of the following?
What is the correct formula for calculating GDP using the expenditure method?
How many currency note printing presses are owned by the Government of India?
Which Five Year Plan is not correct among the following?
Who issues Treasury Bills in India?
The Committee on Insurance Sector Reforms was set up in
What is the impact of an increase in the reverse repo rate?
SEZ is an abbreviation for which term, denoting areas that drive economic growth?
Fill in the Blanks:
………………………… involves changing the interest rate and influencing the money supply. ……………….. ...
The Monetary and Credit Policy is announced by which of the following?