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[12 pts) Companies AAA and BBB are offered the following rates per annum on a $5 million 10-year loan. AAA requires a fixed-rate loan while

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[12 pts) Companies AAA and BBB are offered the following rates per annum on a $5 million 10-year loan. AAA requires a fixed-rate loan while BBB requires a floating-rate loan. Bank of America (BOA) is planning to arrange a fixed-for-LIBOR (=R%& LIBOR exchange) swap with a 20-basis- point spread, which will appear equally attractive to AAA and BBB. Fixed Rate 5% AAA Floating Rate LIBOR+0.5% LIBOR-0.5% (A) Total gain of the swap is: (B) The net gain of the swap to each company without the F.I. is: (C) The net gain of the swap to each company with the F.I. is

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