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9. Company A requires a fixed-rate investment; company B requires a floating-rate investment. The two companies have been offered the following annual rates of return:
9. Company A requires a fixed-rate investment; company B requires a floating-rate investment. The two companies have been offered the following annual rates of return: Company Fixed Rate Floating Rate A 7% LIBOR B 8% LIBOR A bank charges 0.2% per year to structure a swap equally attractive to companies A and B. The swap enables the companies to earn the following annual rates of return: A) A: LIBOR 0.4%; B: 8.4% B) A: 7.6%; B: LIBOR + 0.6% C) A: LIBOR 0.6%; B: 8.6% D) A: 7.4%; B: LIBOR + 0.4% E) None of the above
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