Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Most of the time, a floating-rate bond's coupon adjusts ______.

periodically based on a reference interest rate

once at maturity

only at the time of issuance

randomly throughout the year

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Verified step by step guidance

Understand the concept of a floating-rate bond: A floating-rate bond is a type of bond where the coupon payments (interest payments) are not fixed but instead vary based on a reference interest rate, such as LIBOR or the federal funds rate.

Recognize that the adjustment of the coupon rate is typically tied to a specific schedule, such as quarterly, semi-annually, or annually, depending on the terms of the bond. This adjustment is periodic and predictable.

Eliminate incorrect options: 'once at maturity' is incorrect because floating-rate bonds adjust their coupon rates multiple times during their life, not just at maturity. 'only at the time of issuance' is incorrect because the coupon rate changes throughout the bond's life, not just at issuance. 'randomly throughout the year' is incorrect because adjustments are not random; they follow a set schedule.

Focus on the correct option: 'periodically based on a reference interest rate' is correct because floating-rate bonds adjust their coupon rates at regular intervals based on changes in the reference interest rate.

Conclude that the correct answer is 'periodically based on a reference interest rate,' as this aligns with the definition and behavior of floating-rate bonds.