In April 2017, consulting firm Booz Allen Hamilton announced it had signed an interest rate swap. The
Question:
In April 2017, consulting firm Booz Allen Hamilton announced it had signed an interest rate swap. The interest rate swap effectively converted $150 million of variable rate debt at LIBOR for payments at 1.963 percent. Why would Booz Allen Hamilton use a swap agreement? In other words, why didn’t the company go ahead and issue fixed rate bonds because the net effect of issuing floating rate bonds and then doing a swap is to create a fixed rate bond?
Step by Step Answer:
The companymust have felt that the combination of f...View the full answer
Corporate Finance
ISBN: 978-1259918940
12th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
Related Video
Interest, debt, finance, and capital markets are all important concepts in the world of economics and business. Interest is the cost of borrowing money, and it is typically expressed as a percentage of the amount borrowed. Debt is the money that is borrowed, and it has to be repaid with interest. Finance is the study of how individuals, companies, and organizations manage their money and investments. Capital markets are the places where companies and governments can raise money by selling stocks and bonds to investors. These markets play an important role in the overall economy by helping to fund investment and growth.
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