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41. 42. AAA and BBB both want to borrow $50 million for five years and have been offered the following rates per annum: Fixed rate
41. 42. AAA and BBB both want to borrow $50 million for five years and have been offered the following rates per annum: Fixed rate floating rate AAA LIBOR 6.5% 8.0% BBB LIBOR Which of the following statements is correct under the comparative advantage argument if they want to transform the interest rates between fixed and floating? A) BBB borrows at 6.5% and AAA at 8%, and then they enter into a swap B) AAA borrows at 6.5% and BBB at LIBOR, and then they enter into a swap C) AAA borrows at LIBOR and BBB at 8.0%, and then they enter into a swap D) AAA borrows at LIBOR and BBB at 6.5%, and then they enter into a swap
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