Homework Answers
Coupon for next period = {(LIBOR + Risk premium) / 2} * Face Value of FRN
As we need the coupon rate for 6 months and LIBOR + Risk Premium are quoted for year, so divide by 2
= {(6% + 1/8%) / 2} * 1000
= 30.625
So the coupon rate for next period will be $30.625
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