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 benchmark rate plus a premium.
(b) Premium is also commonly called a spread or margin.
(c) Premium rate is fixed. The number is written in the bond contract and does not change.
(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.