A floating rate note frn with exactly two years remaining, Ask an Expert

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A floating rate note (FRN) with exactly two years remaining until maturity offers a coupon rate equal to 3-month Libor + 1.20% (the quoted margin) on a quarterly basis. Currently, 3-month Libor is 2.80%. The FRN is currently priced in the market at a price of 96 (% of par value).

What discount margin, in basis points, is reflected in the FRN’s price?

A 189 bps

B 273 bps

C 334 bps

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92428075

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