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Companies A and B have been offered the following rates per annum on a $20M five-year loan. Company A requires a floating-rate loan. Company B

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Companies A and B have been offered the following rates per annum on a $20M five-year loan. Company A requires a floating-rate loan. Company B requires a fixed rate loan. Design a swap that will appear equally attractive to both parties (split any gains from the swap right down the middle). Fixed Rate Floating Rate 4.3% LIBOR + 0.1% Company A Company B 7% LIBOR + 0.8% After the swap you designed, at what fixed rate of interest does Company B borrow? (Enter 11.51% as 0.1151. Required precision: 0.0001 +/- 0.0001)

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