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GARP 2016-FRR Exam - Topic 1 Question 23 Discussion

Which one of the following four statements regarding floating rate bonds is incorrect?
C) Floating rate bonds are very sensitive to changes in interest rates.
A) Floating rate bonds have coupon payments tied to floating interest rates or floating interest rate indexes.
B) Floating rate bonds typically have less price risk than fixed rate bonds.
D) Floating rate bonds only have a small degree of interest rate risk.

GARP 2016-FRR Exam - Topic 1 Question 23 Discussion

Actual exam question for GARP's 2016-FRR exam
Question #: 23
Topic #: 1
[All 2016-FRR Questions]

Which one of the following four statements regarding floating rate bonds is incorrect?

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Suggested Answer: C

by Justine at Jun 28, 2026, 05:10 AM

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Elvera
3 days ago
But isn't D also questionable? Small degree of risk?
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Cecily
8 days ago
I agree, C seems off. They aren't that sensitive.
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Leota
14 days ago
I think option C is incorrect.
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Avery
19 days ago
Definitely B) is correct, floating rates are safer!
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Shayne
24 days ago
Wait, D) sounds wrong, how can they have only a small degree of risk?
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Alethea
29 days ago
C) seems off, they shouldn't be that sensitive.
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Johanna
1 month ago
I agree, B) makes sense, less price risk is a plus!
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Nilsa
1 month ago
A) is totally true, floating rates are linked to indexes.
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Marti
1 month ago
I feel like I’ve seen something similar before, and I think the incorrect statement might be D. Floating rate bonds still have interest rate risk, just less than fixed ones.
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Lynna
2 months ago
I’m a bit confused about C and D. I thought floating rate bonds were sensitive to interest rate changes, but D says they only have a small degree of risk, which seems contradictory.
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Olga
2 months ago
I think I saw a practice question where it mentioned that floating rate bonds have less price risk, which makes me lean towards B being true.
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Rosio
2 months ago
I remember studying that floating rate bonds adjust their coupons based on interest rates, so A seems correct.
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