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A is a US.-based MNC with AAA credit; B is an halinn firm with AAA credit. Firm A wints to borrow 61,000,000 for one yoat
A is a US.-based MNC with AAA credit; B is an halinn firm with AAA credit. Firm A wints to borrow 61,000,000 for one yoat and 8 wants to borrow $2,000,000 for one year, The spot exchange rate is $2.00=61.00, a swop bonk makes the following quotes for lyeat swops and AAA-rated firms against USO LIAOR. The firms extemal boctowing opportunities are is there a mutually beneficial swap? Yes, Firm A swops with the swap bark, 5 at ask and C at blid. Firm B swaps with the swap bank, 5 at bild and C at ask. Firmis A and 8 worild each save 906p and the swap benk woud earn 20bop There hi no mutuoly beneficial twap at thete prioes: Wes. Fim A wwos with the wwas bask, $ at bid and C at ask- Fim B sweps with the swap bark, $ at ask and C at bid. Firms A and 8 would each swe sobo and the siwap tank woud esm 200 - nene of the octions
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