Alpha and Beta Companies can borrow for a five year term at the following rates Alpha Beta Moodys credit rating Aa Baa Fixed rate borrowing cost 11 4 13 8 Floating rate borrowing cost LIBOR LIBOR 1 Calculate the quality spread differential (QSD) (Enter your answers as a percent rounded to 2 decimal places )

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Alpha and Beta Companies can borrow for a five-year term at the following rates: Alpha Beta Moodys credit rating Aa Baa Fixed-rate borrowing cost 11.4

Alpha and Beta Companies can borrow for a five-year term at the following rates:

	Alpha		Beta
Moodys credit rating	Aa		Baa
Fixed-rate borrowing cost	11.4	%	13.8	%
Floating-rate borrowing cost	LIBOR		LIBOR + 1	%

Calculate the quality spread differential (QSD). (Enter your answers as a percent rounded to 2 decimal places.)

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