Question
Companies A and B have been offered the following rates per annum on a $100 million five-year loan: Fixed rate Floating rate Company A 4.0%
Companies A and B have been offered the following rates per annum on a $100 million five-year loan:
|
| Fixed rate | Floating rate |
| Company A | 4.0% | LIBOR + 0.2% |
| Company B | 5.2% | LIBOR + 0.8% |
Company A requires a floating-rate loan; company B requires a fixed-rate loan. Design a swap that will appear equally attractive to both companies.
Hint: figure out a range for the swap rate.
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The Making Of Finance
Authors: Isabelle Chambost, Marc Lenglet, Yamina Tadjeddine
1st Edition
1138498572, 978-1138498570
