Explanation:
A fixed-spread tender offer adjusts the offer price based on a benchmark Treasury yield plus a spread. Because the price moves with market rates during the tender window, it reduces or eliminates interest-rate risk for both sides compared with a fixed-price offer.
Thus, the best answer is D.
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Q-196.8. What is an advantage of a fixed-spread tender offer over a fixed-price tender offer?
A
No significant advantage
B
It is easier for bondholders to assess the value of a fixed-spread tender offer
C
Significantly less counterparty credit risk to bondholders in a fixed-spread tender offer
D
Fixed-spread tender offers eliminate the exposure to interest-rate risk for both bondholders and the issuer during the tender offer window