The Following Information Relates to Question 42 Both Bonds Pay Interest Annually

question 17

Multiple Choice

The following information relates to Question 42
$\begin{array} { l c c r } \text { Bond } & \text { Coupon Rate } & \text { Time-to-Maturity } & \text { Price } \\\hline \text { UK Government Benchmark Bond } & 2 \% & 3 \text { years } & 100.25 \\\text { UK Corporate Bond } & 5 \% & 3 \text { years } & 100.65 \\\hline\end{array}$
both bonds pay interest annually. The current three-year EuR interest rate swap benchmark is 2.12%.
-The G-spread in basis points (bps) on the uK corporate bond is closest to:

• A) 264 bps.
• B) 285 bps.
• C) 300 bps.

---

Definitions:

Reserve Requirement Ratio

The fraction of deposits that banks are required to keep on hand, either in cash or as deposits at a central bank, as a measure to ensure bank liquidity.

Required Reserves

The minimum amount of funds that a bank must hold in reserve against deposits, as mandated by regulatory authorities.

Total Checkable Deposits

represents the sum of all demand deposits and negotiable order of withdrawal (NOW) accounts in the banking system, which are available for immediate withdrawal and payment.

Depository Institutions Deregulation and Monetary Control Act

A United States federal law enacted in 1980 aimed at improving the efficiency of the financial institutions system and enhancing the control of the money supply.