Financial Risk Manager Part 1

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Explanation:

Correct answer: D

A floating-rate bond usually has lower, not higher, duration than a straight-coupon bond with a comparable yield, because its coupon resets periodically to market rates.

Why the others are true:

A: Correct — fixed-rate, zero-coupon, and floating-rate bonds are the main interest payment classifications.
B: Correct — deferred-interest bonds and pay-in-kind bonds are variations of zero-coupon structures.
C: Correct — U.S. corporate bonds commonly use the 30/360 day count convention.

So the false statement is D.

Explanation:

Correct answer: D

A floating-rate bond usually has lower, not higher, duration than a straight-coupon bond with a comparable yield, because its coupon resets periodically to market rates.

Why the others are true:

A: Correct — fixed-rate, zero-coupon, and floating-rate bonds are the main interest payment classifications.
B: Correct — deferred-interest bonds and pay-in-kind bonds are variations of zero-coupon structures.
C: Correct — U.S. corporate bonds commonly use the 30/360 day count convention.

So the false statement is D.

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Q-195.3. Each of the following is true about corporate bond interest payments EXCEPT:

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MManit

Last updated: April 18, 2026 at 11:32

a) The three main interest payment classifications of domestically issued corporate bonds are straight-coupon bonds (aka, fixed-rate), zero-coupon bonds, and floating-rate (aka, variable-rate) bonds

50.0%

b) Two variations on the zero-coupon bond are deferred-interest bonds (DIB) and pay-in-kind (PIK) bonds

37.5%

c) The day count convention (a.k.a.) day count basis for corporate bonds issued in the United States is 30/360

d) A floating-rate bond tends to have a higher duration than a straight-coupon bond with an equivalent current yield

12.5%