(Answered) On february 1 2018 the interest rate difference is i 160

Finance

On February 1, 2018, the interest rate difference is (i) 1.60% between the 5-year variable open and the 5-year variable closed contracts and (ii) 1.46% between the 1- year fixed closed and 1-year fixed open contracts.

Both differences are supposed to capture the effect of the pre-payment penalties on the interest rates. One would expect a relatively constant premium for the prepayment penalties on the same day. Explain why the pre-payment premium is not constant on February 1, 2018.

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