Question: A large corporation issued both fixed and floating-rate notes 5 years ago, with terms given in the following table: a. Why is the price range

A large issued both fixed and floating-rate notes 5 years ago, with terms given in the following table:

a. Why is the price range greater for the 9% coupon bond than the floating-rate note?
b. What factors could explain why the floating-rate note is not always sold at par value?
c. Why is the call price for the floating-rate note not of great importance to investors?
d. Is the probability of a call for the fixed-rate note high or low?
e. If the firm were to issue a fixed-rate note with a 15-year maturity, what coupon rate would it need to offer to issue the bond at par value?
f. Why is an entry for yield to maturity for the floating-rate note notappropriate?

Floating-Rate Note $280 million 10 years 98 8% Every year 1-year-bill rate + 2% 10 years after issue 102.50 None 9% Coupon Notes $250 million 20 years 93 9% Fixed coupon Issue size Original maturity Current price (% of par) Current coupon Coupon adjusts Coupon reset rule Callable Call price Sinking fund Yield to maturity Price range since issued 10 years after issue 106 None 9.9% $85-5112 $97-$102

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