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What is the Floating Rate Bonds (FRBs)
Bonds whose interest payments fluctuate with changes in general level of interest rates and are tied to a basic rate (termed as the reference rate).
a. Consider the time line below that shows periodic cash flows and interest rates per period. Interest rate/year 0 1 2 3 4 5 6 7 8 9 Time 2,500 -4,000 6,000 -3,700 Cash flows
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