Question
Consider a 5-year semiannual payment floating-rate security whose coupon rate is determined as: reference rate + 65 basis points The current reference rate is 8%
Consider a 5-year semiannual payment floating-rate security whose coupon rate is determined as:
reference rate + 65 basis points
The current reference rate is 8% and bonds price is 98.5.
(1) What is the current coupon rate?
(2) What is the required yield of the floating-rate bond?
(3) What is the discount margin of the floating-rate bond?
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Financial Markets And Institutions
Authors: Stanley Eakins Frederic Mishkin
9th Global Edition
1292215003, 978-1292215006
