An Analyst Evaluates the Following Information Relating to Floating Rate

question 36

Multiple Choice

An analyst evaluates the following information relating to floating rate notes (FRns) is- sued at par value that have 3-month libor as a reference rate: $\begin{array} { l c c } \hline \text { Floating Rate Note } & \text { Quoted Margin } & \text { Discount Margin } \\\hline \mathrm { X } & 0.40 \% & 0.32 \% \\\mathrm { Y } & 0.45 \% & 0.45 \% \\\mathrm { Z } & 0.55 \% & 0.72 \% \\\hline\end{array}$ based only on the information provided, the FRn that will be priced at a premium on the next reset date is:

• A) FRn x.
• B) FRn Y.
• C) FRn Z.

---

Definitions:

Unimodal

A distribution with a single peak or mode.

Skewed

Describes a distribution that is not symmetrical, with data points clustering more on one side of the mean than the other.

Symmetric

In mathematics, describing a shape or system that is identical in form on both sides of a central axis.

Histogram

A graphical representation of data that groups the data into ranges or bins and displays the frequency of data within each range using bars.