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Alpha and Beta Companies can borrow for a five - year term at the following rates:Beta 1 5 . 4 % LIBOR + 1 %
Alpha and Beta Companies can borrow for a fiveyear term at the following rates:BetaLIBOR Fixedrate borrowing costAlpha LIBORFloatingrate borrowing costBased on the apparent comparative advantage,create aswap where the financialintermediary gain is bp and where Alpha's gain is twice as much as Beta's gain. Show the profits for all parties.
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