A security aimed at granting a business firm more time to improve its credit rating or time to correct cash shortages is known as a reset bond.

Question

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A reset bond is designed to offer companies the opportunity to delay the repayment of the principal on the bond, thereby giving them more time to improve their financial situation, including enhancing their credit rating or addressing cash flow issues. This mechanism often involves adjusting the interest rate of the bond to reflect current market conditions, hence the term "reset."

A Security Aimed at Granting a Business Firm More Time