A company rated A has issued a perpetual dollar FRN. The FRN has a semiannual coupon set

Question:

A company rated A has issued a perpetual dollar FRN. The FRN has a semiannual set at six-month LIBOR plus a spread of 0.5 percent. Six months later, LIBOR is equal to 6 percent, and the market-required spread for an A-rated has moved up to 1 percent. Give an estimate of the value of the FRN on the reset date using the freezing method.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...