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AAA Corp. can borrow at a fixed rate of 6.00% and at a floating rate of LIBOR plus 30 basis points. BBB Cop. can borrow
AAA Corp. can borrow at a fixed rate of 6.00% and at a floating rate of LIBOR plus 30 basis points. BBB Cop. can borrow at a fixed rate of 6.70% and at a floating rate of LIBOR plus 60 basis points. AAA Corp. wants a floating rate loan and BBB Corp, wants a fixed rate loan. The two companies agree to borrow in market of their respective comparative advantage and then swap. The swap rates (the fixed rate in a swap) should lie in which of the following intervals so that both companies benefit from the swap Oa Between 570% and 6,10% Ob Between 5,40% and 6 30% OcBetween 5 20% and 6.10% Od Between 5.90% and 6.30% Oe Between 4.90% and 5.80%
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