A. Correct because the coupon rate of a floating rate bond is typically expressed as a reference rate plus a spread or margin. The spread is usually set when the bond is issued and remains constant until maturity. The reference rate, however, resets periodically. Therefore, the coupon rate adjusts to the level of market interest rates each time the reference rate is reset. B. Incorrect because a change in the issuer's credit quality does not typically result in an adjustment in the coupon rate of a floating rate bond after issuance. The spread is usually set when the bond is issued and remains constant until maturity. It is primarily a function of the issuer's credit risk at issuance. Changes in the issuer's credit quality that occur after issuance are reflected in the price of the bond, not in the coupon rate; a floating rate bond whose issuer credit quality is unchanged is more likely to consistently trade very near par, whereas a bond whose issuer credit quality has changed since issuance is more likely to trade at a price noticeably different than par. C. Incorrect because a change in the issuer's credit quality does not typically result in an adjustment in the coupon rate of a floating rate bond after issuance. The spread is usually set when the bond is issued and remains constant until maturity. It is primarily a function of the issuer's credit risk at issuance. Changes in the issuer's credit quality that occur after issuance are reflected in the price of the bond, not in the coupon rate; a floating rate bond whose issuer credit quality is unchanged is more likely to consistently trade very near par, whereas a bond whose issuer credit quality has changed since issuance is more likely to trade at a price noticeably different than par.