A bond that pays a variable amount of coupon interest over time is called a _____ bond.

Question

Quizplus · Accepted Answer

A floating-rate bond pays a variable amount of coupon interest over time, as the interest rate is tied to a benchmark rate such as LIBOR (London Interbank Offered Rate) or the Fed Funds Rate. This means that as interest rates change, the amount of interest paid by the bond will adjust accordingly. This makes floating-rate bonds attractive to investors who want to hedge against interest rate risk.

A Bond That Pays a Variable Amount of Coupon Interest