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AAA Corp can borrow at a fixed rate of 11.25% and a floating rate of LIBOR +0.85%. BBB can borrow at a fixed rate of
AAA Corp can borrow at a fixed rate of 11.25% and a floating rate of LIBOR +0.85%. BBB can borrow at a fixed rate of 12.75% and a floating rate of LIBOR+4.25%. Who has the comparative advantage for the fixed rate? Who has the comparative advantage for a floating rate? Construct a swap where AAA and BBB will save the exact same amount
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