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A 5-year floating-rate security was issued on 1 January 2015. The coupon rate formula was 1-year LIBOR + 300 bps with a cap of 10%, a floor of 4% and annual reset. The 1-year LIBOR rate on 1 January of each year of the security's life is provided in the following table: Year 1-year LIBOR 2015 3.5% 2016 4.0% 2017 3.0% 2018 2.0% 2019 1.5%During 2019, the payments owed by the issuer were based on a coupon rate closest to: a. 4.5%. b. 4.0%. C. 5.0%. d. 6.5%.

A 5-year floating-rate security was issued on 1 January 2015. The coupon rate formula was 1-year LIBOR + 300 bps with a cap of 10%, a floor of 4% and annual reset. The 1-year LIBOR rate on 1 January of each year of the security's life is provided in the following table: Year 1-year LIBOR 2015 3.5% 2016 4.0% 2017 3.0% 2018 2.0% 2019 1.5%During 2019, the payments owed by the issuer were based on a coupon rate closest to: a. 4.5%. b. 4.0%. C. 5.0%. d. 6.5%.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A 5-year floating-rate security was issued on 1 January 2015. The coupon rate formula was 1-year LIBOR + 300 bps with a cap of 10%, a floor of 4% and annual reset. The 1-year LIBOR rate on 1 January of each year of the security's life is provided in the following table: Year 1-year LIBOR 2015 3.5% 2016 4.0% 2017 3.0% 2018 2.0% 2019 1.5% During 2019, the payments owed by the issuer were based on a coupon rate closest to: a. 4.5%. b. 4.0%. C. 5.0%. d. 6.5%. Clear my choice
Transcribed Image Text:A 5-year floating-rate security was issued on 1 January 2015. The coupon rate formula was 1-year LIBOR + 300 bps with a cap of 10%, a floor of 4% and annual reset. The 1-year LIBOR rate on 1 January of each year of the security's life is provided in the following table: Year 1-year LIBOR 2015 3.5% 2016 4.0% 2017 3.0% 2018 2.0% 2019 1.5% During 2019, the payments owed by the issuer were based on a coupon rate closest to: a. 4.5%. b. 4.0%. C. 5.0%. d. 6.5%. Clear my choice
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