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3. Who has the comparative advantage for the fixed rate? Who has the comparative advantage for the floating rate? What is the total comparative advantage

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3. Who has the comparative advantage for the fixed rate? Who has the comparative advantage for the floating rate? What is the total comparative advantage gain? If AAA agrees to pay BBB a fixed 3% rate and BBB agrees to pay LIBOR, how much will each bank save? Fixed Floating AAA 2.75% LIBOR - 1.85% BBB 4.00% LIBOR + 1.35%

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