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4. Company X wants to borrow $10,000,000 floating for 5 years; company Y wants to borrow $10.000.000 fixed for 5 vears. Their external borrowing opdortunities
4. Company X wants to borrow $10,000,000 floating for 5 years; company Y wants to borrow $10.000.000 fixed for 5 vears. Their external borrowing opdortunities are shown below: A swap bank proposes the following interest only swap: Y will pay the swap bank annual payments on $10,000,000 with a fixed rate of 9.90%. In exchange the swap bank will pay to company Y interest payments on $10,000,000 at LIBOR - 0.15%; What is the value of this swap to company Y ? A. Company Y will save 15 basis points per year on $10,000,000=$15,000 per year. B. Company Y will save 45 basis points per year on $10,000,000=$45,000 per year. C. Company Y will save 5 basis points per year on $10,000,000=$5,000 per year. D. Company Y will only break even on the deal
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