Multiple Choice
A ten-year Floating-rate note (FRN) has coupons referenced to 3-month pound LIBOR, and pays coupon interest quarterly. Assume that the current 3-month LIBOR is 3 percent. If the risk premium above LIBOR that the issuer must pay is 1/8 percent, the next period's coupon rate on a £1,000 face value FRN will be
A) £31.25.
B) £15.625.
C) £30.625.
D) £7.8125.
Correct Answer:
Verified
Correct Answer:
Verified
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