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4. Suppose that you are designing a 2-year maturity interest only loan based upon the adjustable rate. Interest rates will be reset every 6 months

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4. Suppose that you are designing a 2-year maturity interest only loan based upon the adjustable rate. Interest rates will be reset every 6 months and quotation rate is 6 month LIBOR. When the spread is given as 150 bps, what is the average interest rate for the loan term? The forecasts for 6 month LIBOR are as follows (10 points): (Unit: basis point Hall Ist 2nd 3rd 4th LIBOR 120 260 230 200 Interest Rate Answers only (use four decimals). %

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