Yield and Yield Spread Measures for Floating-Rate Instruments

What is the primary characteristic of the coupon payments for a floating-rate note (FRN)?

In the context of floating-rate notes, what is the 'Quoted Margin'?

If the Quoted Margin (QM) on a floating-rate note is greater than the Required Margin (RM) demanded by investors, how will the bond trade?

A floating-rate note pays a coupon of MRR + 150 basis points. If the market's required margin for this issuer is currently 200 basis points, the bond is likely trading at:

Which of the following typically characterizes money market instruments?

Which of the following money market instruments is typically quoted on a discount rate basis?

A 180-day Commercial Paper has a face value of 1,000,000 USD and is quoted at a discount rate of 4 percent based on a 360-day year. What is the issue price?

Consider a 90-day Certificate of Deposit (CD) with a principal of 5,000,000 USD quoted at an add-on rate of 3 percent using a 365-day year. What is the redemption value at maturity?

How do bond yields differ from money market yields regarding compounding?

An investor holds a 180-day T-bill quoted at a discount rate of 2 percent (360-day year). What is the bond equivalent yield (BEY)?

Why do floating-rate notes (FRNs) generally have stable prices?

Assume a 2-year FRN pays MRR + 2.5 percent. The current MRR is 3 percent, and the margin required by investors is 3.5 percent. What will happen to the price of the FRN?

Which term describes the interest payment structure where the rate is determined at the beginning of the period but paid at the end?

If a firm has improved its creditworthiness significantly since issuing a floating-rate note, how does the Quoted Margin compare to the Required Margin?

Calculate the price of a 180-day T-bill quoted at a discount rate of 3.5 percent (360-day year) with a face value of 100,000 EUR.

What does an 'Add-on Rate' quote of 4 percent for a 365-day year imply for a 100 USD loan over one year?

Which of the following conventions is most common for United States Treasury bills?

To compare a 90-day commercial paper quoted at a discount rate (360-day) with a 90-day CD quoted at an add-on rate (365-day), an analyst should convert:

A bond has a Quoted Margin of 100 bps. The market requires a 125 bps margin. The Reference Rate (MRR) is 4 percent. What is the approximate coupon rate?

Calculate the add-on rate (AOR) for a 365-day year given a 90-day holding period return of 2 percent.

A certificate of deposit (CD) is issued for 10 million USD for 60 days at an add-on rate of 2.5 percent (365-day year). What is the total interest paid?

Which of the following best describes the 'Amount' in the formula for a Discount Rate quote?

Why might a Commercial Paper rate converted to a Bond Equivalent Yield (BEY) be higher than its quoted Discount Rate?

Calculate the Discount Rate (360-day basis) for a T-bill purchased at 98.50 with 90 days to maturity (Face Value = 100).

If a floating-rate note typically has a periodicity of 2 (semiannual), what does this imply for its yield calculation?

When comparing two money market instruments, why might an analyst prefer the one with the lower quoted rate?

Instrument A is a 90-day T-bill quoted at 2 percent discount (360-day). Instrument B is a 90-day CD quoted at 2.05 percent add-on (365-day). Which offers the higher Bond Equivalent Yield?

What is the primary reason quoted margins on FRNs might differ from required margins?

Calculate the price of a 60-day commercial paper with a face value of 1,000,000 USD and a discount rate of 5 percent (360-day year).

A Money Market yield quoted on an add-on basis is 4.5 percent (360-day year). Convert this to a Bond Equivalent Yield (BEY) for a 120-day instrument.

Which factor would most likely result in a negative Quoted Margin on an FRN?

What is the effective annual rate (EAR) of a money market instrument with a periodicity of 1?

An FRN pays MRR + 50bps. If the MRR remains constant but the issuer's credit rating is downgraded, what happens to the Discount Margin (Required Margin)?

If a bond's quoted price is 98.00 and it has accrued interest of 1.50, what is the 'Full Price' paid by the buyer?

Which yield curve shape usually exists when a money market discount rate is significantly lower than the bond equivalent yield?

If an investor purchases a 180-day Bankers' Acceptance quoted at 3.0 percent discount (360-day), what is the effective annual yield (assuming 365-day year for compounding)?

Which of the following describes 'Bond Equivalent Yield' for a money market instrument?

For a Floating Rate Note, if the reference rate is 3 percent and the quoted margin is 50 basis points, what is the coupon payment for a period of 180 days on a 1,000,000 USD face value (assuming 360-day convention)?

Why is the 360-day year convention often used in money markets?

A 90-day T-bill is quoted at 2.40 percent discount. What is the purchase price for 1,000 face value?

Which of the following instruments is generally quoted on an add-on rate basis?

Calculate the holding period return (HPR) for a 180-day T-bill purchased at 980 and maturing at 1000.

If a Repo rate is quoted at 3.0 percent for 7 days (360-day year), what is the repayment amount on 10,000,000 USD?

What happens to the price of a 'floater' (FRN) on a reset date if the credit quality of the issuer is unchanged?

Convert a 2.50 percent discount rate (360-day) on a 180-day instrument to an Add-on Rate (360-day).

The 'periodicity' of a standard US government bond yield is:

What does a Quoted Margin of 'MRR + 0 bps' imply?

Using a 365-day year, calculate the discount rate for a bill with 182 days to maturity priced at 97.50.

Which instrument's quoted 'amount' usually refers to the face value paid at maturity?

If a bond trades at a quoted price of 99.00 and the par value is 1,000, what is the flat price in currency terms?