Floating-rate bonds are designed to ___________, while convertible bonds are designed to __________.
A) minimize the holders' interest rate risk; give the investor the ability to share in the price appreciation of the company's stock
B) maximize the holders' interest rate risk; give the investor the ability to share in the price appreciation of the company's stock
C) minimize the holders' interest rate risk; give the investor the ability to benefit from interest rate changes
D) maximize the holders' interest rate risk; give investor the ability to share in the profits of the issuing company
E) None of the options are correct.

Question

Quizplus · Accepted Answer

Floating-rate bonds adjust their interest payments to current market rates, reducing interest rate risk. Convertible bonds allow investors to convert the bond into a predetermined number of the company's shares, potentially benefiting from stock price increases.

Floating-Rate Bonds Are Designed to ___________, While Convertible Bonds Are