A security that has fixed principal and maturity, and interest that normally comprises a fixed interest rate and some function of the dividend paid in the previous six months is best described as a(n):
A) income bond.
B) cash flow bond.
C) commodity bond.
D) adjustable rate convertible subordinated security.

Question

Quizplus · Accepted Answer

Adjustable rate convertible subordinated securities often have a fixed principal and maturity, with interest rates that can adjust based on certain conditions, such as the dividends paid in the previous period. This makes them distinct from income, cash flow, and commodity bonds, which do not typically feature this combination of fixed and variable interest components.

A Security That Has Fixed Principal and Maturity, and Interest