Which of the following types of debt securities protect investors against interest rate risk?
A) floating rate bonds
B) extendible notes
C) original issue deep discount bonds
D) floating rate bonds and extendible notes

Question

Quizplus · Accepted Answer

Floating rate bonds and extendible notes protect investors against interest rate risk because their interest rates adjust periodically based on prevailing market rates. As interest rates rise, the interest rate paid on these types of securities also increases, providing investors with a higher yield to offset the impact of rising rates.

Which of the Following Types of Debt Securities Protect Investors