Question: A company has issued a floating-rate note with a coupon rate equal to the three-month Libor + 85 basis points. Interest payments are made quarterly

A company has issued a floating-rate note with a coupon rate equal to the three-month Libor + 85 basis points. Interest payments are made quarterly on 31 March, 30 June, 30 September, and 31 December. On 31 March and 30 June, the three-month Libor is 2.25% and 2.55%, respectively. The coupon rate for the interest payment made on 30 June is:

A. 3.40%

B. 3.10%

C. 3.20%

D. None is correct

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