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a.) The following are rates offered for TIF company and LIO company on a 100 million seven-year loan: Fixed TIF 4,0% LIO 5.7% Floating 6-month
a.) The following are rates offered for TIF company and LIO company on a 100 million seven-year loan: Fixed TIF 4,0% LIO 5.7% Floating 6-month LIBOR 0.1% 6-month LIBOR 2.2% Assume that TIF wants to borrow at a floating rate of interest and LIO wants to borrow at a fixed interest rate. A financial institution is willing to arrange the swap and requires 50 basis points spread. If the swap is to appear equally attractive to TIF and LIO, what rates of interest Iwill the companies end up paying
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