Question 1001 floating coupon bond, bond pricing
Which of the following statements about vanilla floating coupon bonds is NOT correct? A vanilla floating coupon bond's:
(a) Coupon rate is equal to the floating benchmark rate plus a premium.
(b) Premium is fixed. The number is written in the bond contract and does not change.
(c) Premium is also called commonly called a spread or margin.
(d) Benchmark rate is fixed. The number is written in the bond contract and does not change.
(e) Paying quarterly US dollar coupons often use the 90-day USD LIBOR rate as the benchmark.