Leveraged Floater Example in CFA book
Pg 489 of Volume 5. If says this transaction requires no capital. I can’t see how that is the case. You issue a floater that pays 1.5x LIBOR.
Lets say you issue a 100MM issue with payments of LIBOR x 1.5
Then, it says you buy a bond from American Factories with face if 1.5x FP = 1.5x 100MM = 150MM
Where does the 50MM come from? |