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7. Company B sells a 10-year fixed rate bond at 8%. At the same time of the issue, the company buys a receiver swaption with

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7. Company B sells a 10-year fixed rate bond at 8%. At the same time of the issue, the company buys a receiver swaption with 5 years remaining to expiration, 2.5% premium. Fill in table below assuming the exercise of the swaption. Year Company pays to Net cost to Company pays to Company receives bond holders swaption from swaption company 1 2 3 4 5 6 7 8 9 10 Explain the net effect to bond holders. Explain the net effect to the company issuing the bond. If you were a corporate treasurer, would you follow example in exercise 1 or exercise 2? Why, explain

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