Xyz ltd just issued 2000 floating rate notes each with the, Ask an Expert

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XYZ Ltd. just issued 2,000 floating rate notes, each with the face value of $20,000, maturity of 6 years, interest payments per annum and interest rate, i, is set as:

i= Beginning of the period LIBOR + 1.0%

Suppose interest rate reset-period is 3 months. LO+IBOR is 1.5% per annum today and it is expected to be 2%, 2.5% and 3.0% at the beginning of quarter 2, 3, and 4 respectively.

Find interest payments per floating rate notes at the end of year 1.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92322029

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