A holder of which of the following types of bonds is least likely to suffer from rising interest rates?

Question

Quizplus · Accepted Answer

Floating rate bonds have their interest rates adjusted periodically based on a benchmark rate such as LIBOR. Hence, their interest payments increase along with rising interest rates. Therefore, the holders of floating rate bonds are least likely to suffer from rising interest rates. On the other hand, fixed rate bonds and zero-coupon bonds have predetermined interest rates, which do not change with changes in market interest rates. As a result, the holders of these bonds may suffer losses if interest rates rise, as the value of their bonds may decline in response to new bonds offering higher interest rates.

A Holder of Which of the Following Types of Bonds