Follow Us :

Fixed Income Q3

0. Which of the following statements are most likely to be correct about coupon payment structures? Statement I: Floating rate notes are affected more when interest rates increase and as a result have greater interest rate risk. Statement II: Bonds with step-up coupons offer bondholders some protection against rising interest rates. Statement III: A credit-linked coupon bond has a coupon that changes with the bond’s credit rating while a payment-in-kind coupon bond allows the issuer to pay interest in the form of additional amounts of bond issue rather than cash payment.

  • Option : C
  • Explanation : Statements II and III are correct. Statement I is incorrect because floating rate notes are less affected when interest rate changes and therefore have less interest rate risk.
Cancel reply

Your email address will not be published. Required fields are marked *


Cancel reply

Your email address will not be published. Required fields are marked *