Quiz: leveraged floader planning, interest, payments, percent, paying

DoubleDip

Leveraged Floater. JMI has issued a $12 million leveraged floater with semi-annual interest payments. The rate is 1.2 times LIBOR. The firm is planning to hedge the risk of this note with a bond paying 6 percent and a swap with a fixed rate of 4.4 percent.


In Situation 4, the net semi-annual cash flow is closest to:
A) $115,200.
B) $230,400.
C) $96,000.

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