On page 322 Book 5 Example 12, does anyone know what the sentence means? “Of course, a little more than 100 basis points of this amount is the spread”
Solution 1:
=> Libor+ 100 Basis points = 9%+1% = 10%
=> Effective annual rate = 9.34%
So, 9.34%<10%
Solution 2:
=> Libor+ 100 Basis points = 5%+1% = 6%
=> Effective annual rate = 7.24%
So, 7.24%>6%
Therefore, why are the statements on both solutions the same?
