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12 of 28 Unsure Suppose that two companies face the following rates in the market Fixed Floating Company X Company Y 8.00% 8.90% LIBOR-0.1%

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12 of 28 Unsure Suppose that two companies face the following rates in the market Fixed Floating Company X Company Y 8.00% 8.90% LIBOR-0.1% LIBOR +0.2% In that example of a possible swap, the swap bank receives from Company Y a rate of 8.5% LIBOR Company X BANK Company Y LIBOR LIBOR If you had to change that rate to some other value, how much should you make it, so that every the swap would be consistent with the first table displaying market rates? O a. 8.7% O b. 8.6% Oc. 8.2% O d. 8.4% Oe. 8.3%

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