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 these

Question

Quizplus · Accepted Answer

Floating-rate bonds are designed to minimize the holders' interest rate risk by fluctuating with changes in interest rates. Convertible bonds, on the other hand, are designed to give the investor the ability to share in the price appreciation of the company's stock, allowing the bondholder to convert the bond to common stock at a specified price.

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