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Alpha and Beta Companies can borrow for a five - year term at the following rates: Alpha Beta Moody s credit rating Aa Baa Fixed
Alpha and Beta Companies can borrow for a fiveyear term at the following rates:
Alpha Beta
Moodys credit rating Aa Baa
Fixedrate borrowing cost
Floatingrate borrowing cost LIBOR LIBOR
If there is no swap bank involved, and Alpha wants to borrow through floating debts and desires of the total benefit from the swap. How much could Alpha save from the swap? In other words, the allincost for Alpha is LIBOR B through the swap, and B is worth of the swap's total benefit For example, if the total benefit of the swap is then B x you enter your answer as
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