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Questions and Answers
- A bond has a coupon interest rate set as 1-year LIBOR + 1% and coupon rate is paid annually. This bond is termed as a
- A bond has a coupon interest rate set as 1-year LIBOR + 1% and coupon rate is paid annually. This bond is termed as a
- A. Zero coupon bond.
- B. Fixed coupon bond.
- D. LIBOR bond
- C. Floater. (correct)
- The coupon rate of a bond is decided as 6 months LIBOR + 1.25%. It has a floor rate of 4% and a Cap rate of 8%. The relevant LIBOR for the current coupon payments comes to 2%. The coupon rate for the current coupon period comes to.
- The coupon rate of a bond is decided as 6 months LIBOR + 1.25%. It has a floor rate of 4% and a Cap rate of 8%. The relevant LIBOR for the current coupon payments comes to 2%. The coupon rate for the current coupon period comes to.
- A. 3.25%
- B. 8%
- C. 2%
- D. 4% (correct)
- Floor rate of a variable rate bonds is
- Floor rate of a variable rate bonds is
- A. The maximum coupon rate.
- B. The minimum coupon rate. (correct)
- C. Minimum benchmark rate.
- D. Maximum benchmark rate
- Cap rate of a variable rate bond is
- Cap rate of a variable rate bond is
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- Coupon rate of a floating rate bond is defined as 6 months LIBOR + 1.25%. It has a floor rate of 2% and a Cap rate of 5%. The LIBOR for the current coupon period comes to 4.2%. The applicable coupon rate for the current coupon period is,
- Coupon rate of a floating rate bond is defined as 6 months LIBOR + 1.25%. It has a floor rate of 2% and a Cap rate of 5%. The LIBOR for the current coupon period comes to 4.2%. The applicable coupon rate for the current coupon period is,
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- Which of the following is correct with respect to a variable rate bond.
- Which of the following is correct with respect to a variable rate bond.
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- A cap rate and a floor rate are applicable for a
- A cap rate and a floor rate are applicable for a
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- If you expect the interest rates to increase in the near future and remain at a higher level for another 5 years period, what action will you be taking as a potential borrower for a 5 years period for a new capex project.
- If you expect the interest rates to increase in the near future and remain at a higher level for another 5 years period, what action will you be taking as a potential borrower for a 5 years period for a new capex project.
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- Which of the following will represent equity capital of the corporate.
- Which of the following will represent equity capital of the corporate.
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- Which of the following is not a part of the debt funding for a corporate.
- Which of the following is not a part of the debt funding for a corporate.
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