The purpose of a floating-rate bond is to:
A) save interest expense for corporate issuers.
B) avoid making interest payments until maturity.
C) shift the yield curve.
D) offer rates adjusted to current market conditions.

Question

Quizplus · Accepted Answer

The purpose of a floating-rate bond is to offer rates that are adjusted to current market conditions. This means that the interest rate on a floating-rate bond will fluctuate over time based on changes in a specified reference rate, such as LIBOR. This can be beneficial to investors who want to avoid interest rate risk, as the bond's coupon rate will adjust to changes in market interest rates.

The Purpose of a Floating-Rate Bond Is To