Question
A corporate treasurer tells you that he has just negotiated a five-year loan at a competitive fixed rate of interest of 5.2%. The treasurer explains
A corporate treasurer tells you that he has just negotiated a five-year loan at a competitive
fixed rate of interest of 5.2%. The treasurer explains that he achieved the 5.2% rate by
borrowing at six-month LIBOR plus 150 basis points and swapping LIBOR for 3.7%. He
goes on to say that this was possible because his company has a comparative advantage in the
floating-rate market. What has the treasurer overlooked?
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Small Business Management Launching and Growing New Ventures
Authors: Justin Longenecker, Leo Donlevy, Terri Champion, William Petty, Leslie Palich, Frank Hoy
6th Canadian edition
