Axil Corp. has not tapped the Deutsche mark public debt market because of concern about a likely appreciation of that currency and only wishes to be a floatingrate dollar borrower, which it can be at LIBOR + 1%. Bevel Corp. strongly prefers fixedrate DM debt, but it must pay 1.5% more than the 6 1/4% coupon that Axil's DM notes would carry. Bevel, however, can obtain Eurodollars at LIBOR + %.

What is the maximum possible cost savings to Axil from engaging in a currency swap with Bevel?

a)1%

b)75%

c)2%

d)1.25%

What is the maximum possible cost savings to Bevel from engaging in a currency swap with Axil?

a)1%

b)75%

c)2%

d)1.25%