Listen to a Business English Dialogue about Floating securities
Jeffrey: Hey Avery, have you heard of floating securities in finance?
Avery: Yeah, I think floating securities are financial instruments whose interest rates or dividends fluctuate based on market conditions.
Jeffrey: That’s correct. Floating securities, such as floating-rate bonds, provide protection against interest rate fluctuations.
Avery: How do floating securities differ from fixed-rate securities?
Jeffrey: Fixed-rate securities have a set interest rate or dividend that remains constant throughout the life of the investment, whereas floating securities adjust their rates periodically.
Avery: Are floating securities more or less risky than fixed-rate securities?
Jeffrey: It depends. Floating securities can be less risky during periods of rising interest rates but may be riskier when rates are falling.
Avery: Can investors benefit from investing in floating securities?
Jeffrey: Yes, investors can benefit from floating securities during periods of increasing interest rates, as they offer the potential for higher returns.
Avery: So, it’s important for investors to consider market conditions when investing in floating securities?
Jeffrey: Absolutely. Understanding how interest rates impact the performance of floating securities is crucial for making informed investment decisions.
Avery: Thanks for explaining that, Jeffrey. Floating securities seem like an interesting investment option.
Jeffrey: No problem, Avery. They can be a valuable addition to a diversified investment portfolio.