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an issuer issues three bonds. i) a fixed rate bond paying a fixed coupon, ii) a floater paying a floating coupon rate equal to LIBOR plus 200 basis pooints, and iii) an inverse floater paying a floating coupon equal to 800 basis points minus LIBOR. Which bond is least risky? a. the floater b.  equally risky c. the inverse floater d. the fixed rate bond

an issuer issues three bonds. i) a fixed rate bond paying a fixed coupon, ii) a floater paying a floating coupon rate equal to LIBOR plus 200 basis pooints, and iii) an inverse floater paying a floating coupon equal to 800 basis points minus LIBOR. Which bond is least risky? a. the floater b.  equally risky c. the inverse floater d. the fixed rate bond

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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an issuer issues three bonds. i) a fixed rate bond paying a fixed coupon, ii) a floater paying a floating coupon rate equal to LIBOR plus 200 basis pooints, and iii) an inverse floater paying a floating coupon equal to 800 basis points minus LIBOR. Which bond is least risky?

a. the floater

b.  equally risky

c. the inverse floater

d. the fixed rate bond

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