# Of course, a little more than 100 basis points of this amount is the spread?

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?

With exam day right around the corner, Schweser's Final Review products are designed to help you finish out your study plan and walk into the testing center feeling prepared and confident.

The sentence applies to both situations. The first situation there was no payout out on the option while the second situation there was a payout.

Both situations have the same 100 bps over libor.

125mph wrote:

The sentence applies to both situations. The first situation there was no payout out on the option while the second situation there was a payout.

Both situations have the same 100 bps over libor.