- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 42. Fixed-Income Securities: Defining Elements
- Subject 4. Structure of a Bond's Cash Flows
CFA Practice Question
Step-up notes are ______.
A. bonds that have coupon payments that reset periodically according to some reference rate
B. bonds that have no coupon payment for a deferred period
C. securities that have a coupon rate that increases over time
Explanation: Step-up notes are securities that have a coupon rate that increases over time.
User Contributed Comments 2
| User | Comment |
|---|---|
| bloomt | What is meant by 'coupon rate reset'? Will that always be a drop in coupon or can the rate move either direction? |
| Jorgensen | only ratchet bonds have an optional fixed drop in the coupon payment every time it resets.. |