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Company A is an AAA-rated firm desiring to issue five-year FRNs. It finds that it...

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Finance

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Company A is an AAA-rated firm desiring to issue five-year FRNs. It finds that it can issue FRNs at six-month LIBOR +.145 percent or at three-month LIBOR + 145 percent. Given its asset structure, three-month LIBOR is the preferred index. Company B is an A-rated firm that also desires to issue five-year FRNs. It finds it can issue at six-month LIBOR +1.0 percent or at three-month LIBOR +.645 percent. Given its asset structure, six-month LIBOR is the preferred index. Assume a notional principal of $15,000,000. Determine the quality spread differential (QSD). (Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places.)

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