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Compute the coupon rate for the next year

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Reference no: EM133071713

A floating-rate issue has the following coupon formula: 1-year Treasury rate + 30 basis points with a cap of 7% and a floor of 4.5%

The coupon rate is reset every year. Suppose that at the reset date the 1-year Treasury rate is as shown below. Compute the coupon rate for the next year:

 

1-year T-bill 

First reset date

6.1% 

second reset date

6.5% 

Third reset date

6.9% 

Fourth reset date

6.8% 

Fifith reset date

5.7% 

Sisth reset date

5.0% 

Severth reset date

4.1% 

Eighth reset date

3.9%

Ninth reset date

3.2% 

Tenth reset date

4.4% 

Reference no: EM133071713

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