Multiple choice

For which of the following loan documents can floating interest rate be made applicable, which does not have a fixed interest rate during its entire life span?

  1. Loan

  2. A bond

  3. Mortgage funds

  4. Deposits

  5. All of the above

Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

Floating interest rates can be applied to all listed instruments - loans, bonds, mortgage funds, and deposits. Unlike fixed rates that remain constant, floating rates are reset periodically based on a benchmark rate plus a spread, allowing them to adjust with market conditions throughout the instrument's life.