If the risk premium above LIBOR that the issuer must pay is 12.5 basis points, the next period's coupon payment on a £1,000 face value FRN will be

Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 8MC: Define the stated (quoted) or nominal rate INOM as well as the periodic rate IPER. Will the future...
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A ten-year floating-rate note (FRN) has coupons referenced to 3-month pound LIBOR, and pays coupon interest quarterly. Assume that the current 3-month LIBOR is 4 percent. If the risk premium above LIBOR that the issuer must pay is 12.5 basis points, the next period's coupon payment on a £1,000 face value FRN will be

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£31.25.

£82.50.

£165.00.

£10.31.

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