Your neighbour is bragging that the coupon payment on the bonds he bought ﬁve years ago has increased in each of the last three years. You know he must own _______________.

Question

Quizplus · Accepted Answer

A floating rate bond has a coupon that adjusts periodically based on a reference rate, such as LIBOR. If interest rates have increased over the past few years, then the coupon payment on a floating rate bond would have also increased.

Your Neighbour Is Bragging That the Coupon Payment on the Bonds