Busıness Fınance Iı Deneme Sınavı Sorusu #1008621
How do floating rate bonds work?
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By the time the changing interest environment in the international financial markets, floating rate bonds (floaters) began to be issued in which, the coupon payments are adjustable. |
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A floating rate bond, where the bond has five years until maturity. |
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Some characteristics of the floaters have been developed in order to protect the investors. |
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A floating rate fund is a fund that invests in financial instruments paying but a fixed interest rate. |
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Floating rate notes are bonds that have a variable coupon, equal to a money market reference rate. |
The bonds conventionally have fixed interest payments up to maturity as calculated based on the fixed par value. However, by the time the changing interest environment in the international financial markets, floating-rate bonds (floaters) began to be issued in which, the coupon payments are adjustable. The adjustments are tied to an interest rate index such as the Treasury bill interest rate or the 30-year Treasury bond rate and the value of a floating-rate bond depends on exactly how the coupon payment adjustments are defined.
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