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A savings and loan's credit rating has just slipped, and half of its assets are long term mortgages. It offers to swap interest payments with

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A savings and loan's credit rating has just slipped, and half of its assets are long term mortgages. It offers to swap interest payments with a money center bank in a $150 million deal. The bank can borrow short term at LIBOR ( 3.5 percent) and long term at 4 percent. The savings and loan must pay LIBOR plus 2 percent on short term debt and 7.5 percent on long term. debt. Show how these parties could put together a swap deal that benefits both of them

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