CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

If interest rates are expected to decline, an investor can earn a higher coupon interest rate by purchasing a(an) ______.
A. floater with a floor
B. callable bond
C. inverse floater
Explanation: Inverse floaters have a coupon formula such that the coupon rate increases when the reference rate decreases and decreases when reference rate increases. The coupon rate moves in the opposite direction from the change in the reference rate.

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