CFA Practice Question

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CFA Practice Question

Floating-rate bonds have adjustable rates to protect real rates of return against inflation. The rates paid are limited by ______.

I. the put provisions of the issues
II. a floor rate that sets the minimum
III. a cap rate that sets the maximum
Correct Answer: II and III

User Contributed Comments 2

User Comment
RCapistrano Protect both bond issuers(III) and holders(II).
2014 If modified question
Protection only to bondholders: floor rate
Protection only to issuers: Cap rate
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