Question
Your firm has just issued five-year floating-rate notes indexed to six-month U.S. dollar LIBOR plus 1/4 percent. What is the amount of the first coupon
- Your firm has just issued five-year floating-rate notes indexed to six-month U.S. dollar LIBOR plus 1/4 percent. What is the amount of the first coupon payment your firm will pay per U.S. $1,000 of face value, if six-month LIBOR is currently 7.2 percent? (Assume semi-annual compounding.)
The correct answer of this question is 36.25, but i kept getting 37.25, which I got from 0.5 x (.072 + .0025) x $1,000 = $37.25. Is it because I messed up the semi-annual compounding? I don't know how to compute this 36.25.
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Entrepreneurial Finance
Authors: J . chris leach, Ronald w. melicher
4th edition
538478152, 978-0538478151
