CIMA Financial Strategy F3 Question # 109 Topic 11 Discussion

CIMA Financial Strategy F3 Question # 109 Topic 11 Discussion

F3 Exam Topic 11 Question 109 Discussion:
Question #: 109
Topic #: 11

A company has some 7% coupon bonds in issue and wishes to change its interest rate profile.  

It has decided to do this by entering into a plain coupon interest rate swap with it's bank.

 

The bank has quoted a swap rate of:      6.0% - 6.5% fixed against LIBOR.

 

What will the company's new interest rate profile be?


A.

VARIABLE at LIBOR


B.

VARIABLE at LIBOR + 0.5%


C.

VARIABLE at LIBOR + 1.0%


D.

FIXED at 6.5%


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