The rate typically used as a basis to adjust the rate paid on a variable rate security is
A) treasury bill
B) tax-exempt bond
C) common stock
D) corporate bond

Question

Quizplus · Accepted Answer

The rate paid on a variable rate security is generally adjusted based on a benchmark rate, and the most commonly used benchmark rate is the Treasury bill rate. Treasury bills are issued by the U.S. government and are considered to be a low-risk investment. Therefore, the Treasury bill rate is widely used to set the benchmark rate for variable rate securities. Other benchmark rates may also be used, but the Treasury bill rate is the most commonly used benchmark rate.

The Rate Typically Used as a Basis to Adjust the Rate