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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-rate borrowing cost

 

Alpha and Beta Companies can borrow for a five-year term at the following rates: Alpha Beta Moody's credit rating Aa Baa Fixed-rate borrowing cost 10.5% 12.0% Floating-rate borrowing cost LIBOR LIBOR+1% Please develop an interest rate swap in which both Alpha and Beta havean equal cost savings in their borrowing costs. Assume Alpha desires floating-rate debt and Beta desires fixed-rate debt. No swap bank is involved in this transaction

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