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    Question

    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 Correct Answer Incorrect Answer
    B A bond with a fixed interest rate and has lower yield than varying interest rate bond Correct Answer Incorrect Answer
    C A bond with a varying interest rate and has better yield than fixed interest rate bond Correct Answer Incorrect Answer
    D A bond with a varying interest rate and has lower yield than fixed interest rate bond Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    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

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