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ABC Limited and AMV Limited are offered with the following interest rates. These interest rates are adjusted for any differential effects of taxes. Assuming that
ABC Limited and AMV Limited are offered with the following interest rates. These interest rates are adjusted for any differential effects of taxes. Assuming that ABC Limited prefers to borrow US dollars at a floating interest rate, whereas AMV Limited prefers to borrow Australian dollars at a fixed interest rate. The AZN Bank arranges a swap between these two companies. The Bank requires a 10-basis-point spread. Let's assume that the swap designed by AZN Bank is equally attractive to both companies. From your view, what interest rates will ABC Limited and AMV Limit finally pay for their borrowings? [10 marks]
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