Multiple Choice
A five-year $1,000 face value floating-rate note (FRN) has coupons referenced to six-month dollar LIBOR,and pays coupon interest semiannually.Assume that the last six-month LIBOR was 6.5 percent and the current six-month LIBOR is 6 percent.If the risk premium above LIBOR that the issuer must pay is 0.25%,by how much did the coupon payment change?
A) increase by $2.5
B) decrease by $2.5
C) increase by $5
D) decrease by $5
Correct Answer:
Verified
Correct Answer:
Verified
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