15. Swaps. Firms A and B face the following borrowing rates for a 5-year fixed-rate debt issue in U.S. dollars or euros:

Suppose that A wishes to borrow U.S. dollars and B wishes to borrow euros. Show how a swap could be used to reduce the borrowing costs of each company. Assume a spot exchange rate of 1 euro to the dollar. (LO3)

The packaged foods and meats industry (use Industry link) is made up of companies that buy commod- ities and package and/or transform them into food for retail customers. Review the list of companies (Industry Constituents) in the industry, and review the company profile of one firm of interest to you.

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U.S. Dollars Euros Firm A 8% 6% Firm B 6 5