The table below provides a history of a fixed income security’s coupon rate and the risk free rate over a five-year period.
| Year | Risk Free Rate | Coupon Rate |
| 1 | 3.00% | 6.00% |
| 2 | 3.50% | 5.00% |
| 3 | 4.25% | 3.50% |
| 4 | 3.70% | 4.60% |
| 5 | 3.25% | 5.50% |
The security is most likely a(n):
B is correct because the security’s coupon rate moves in the opposite direction (inversely) with the risk free rate. (Specifically: Coupon rate = 12.00% – 2 × Risk free rate.)