2) Alpha and Beta Companies can borrow for a five year term at the following rates a) Calculate the quality spread differential (QSD) Describe an interest rate swap in which both Alpha and Beta have an equal cost savings in their borrowing costs Assume Alpha desires floating rate debt and Beta desires fixed rate debt Assume no swap bank is involved b) Repeat the above assuming that a swap bank is involved as an intermediary Assume the swap bank is quoting five year dollar interest rate swaps at 9 7 9 8 percent against LIBOR flat 2) Alpha and Beta Companies can borrow for a five year term at the following rates a) Calculate the quality spread differential (QSD) Describe an interest rate swap in which both Alpha and Beta have an equal cost savings in their borrowing costs Assume Alpha desires floating rate debt and Beta desires fixed rate debt Assume no swap bank is involved b) Repeat the above assuming that a swap bank is involved as an intermediary Assume the swap bank is quoting five year dollar interest rate swaps at 9 7 9 8 percent against LIBOR flat

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2) Alpha and Beta Companies can borrow for a five year term at the following rates  a) Calculate the quality spread differential (QSD)  Describe an interest rate swap in which both Alpha and Beta have an equal cost savings in their borrowing costs  Assume Alpha desires floating rate debt and Beta desires fixed rate debt  Assume no swap bank is involved  b) Repeat the above assuming that a swap bank is involved as an intermediary  Assume the swap bank is quoting five year dollar interest rate swaps at 9 7 9 8 percent against LIBOR flat  2) Alpha and Beta Companies can borrow for a five year term at the following rates  a) Calculate the quality spread differential (QSD)  Describe an interest rate swap in which both Alpha and Beta have an equal cost savings in their borrowing costs  Assume Alpha desires floating rate debt and Beta desires fixed rate debt  Assume no swap bank is involved  b) Repeat the above assuming that a swap bank is involved as an intermediary  Assume the swap bank is quoting five year dollar interest rate swaps at 9 7 9 8 percent against LIBOR flat

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2) Alpha and Beta Companies can borrow for a five-year term at the following rates: a) Calculate the quality spread differential (QSD). Describe an interest

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