- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 44. Introduction to Fixed-Income Valuation
- Subject 6. Yield Measures for Floating-Rate Notes and Money Market Instruments
CFA Practice Question
A floater resets its interest rate quarterly at three-month LIBOR plus 0.5%. It is being sold at a discount to par value. Its quoted margin is most likely ______ 0.5%.
A. higher than
B. equal to
C. lower than
Explanation: The quoted margin is always 0.5%.
User Contributed Comments 2
| User | Comment |
|---|---|
| sahilb7 | Huh?!?!?! |
| ascruggs92 | tricky. because it resets quarterly, in the time between resets, the bond can trade at a premium/discount to par if interest rates fluctuate. However, the quoted margin never changes |