medium · Debt Capital Markets bond-instruments-structures
A 5-year floating-rate note (FRN) pays SOFR + 200 bps. If the market's required 'Discount Margin' for this issuer rises to 250 bps, what will happen to the price of the FRN?
- The price will fall, but only if SOFR also decreases.
- The price will rise above par.
- The price will fall below par.
- The price will remain at par because the coupon resets.
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