Question
Companies A and B have been offered the following rates per annum on a $20 million five-year loan: Fixed Rate Floating rate Company A 5.0%
Companies A and B have been offered the following rates per annum on a $20 million five-year loan:
| Fixed Rate | Floating rate | |
| Company A | 5.0% | SOFR + 0.1% |
| Company B | 6.4% | SOFR + 0.6% |
Company A requires a floating-rate loan; Company B requires a fixed-rate loan. Design a swap that will net a bank, acting as intermediary, 0.1% per annum and that will appear equally attractive to both companies."
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Essentials Of Managerial Finance
Authors: Scott Besley, Eugene F. Brigham
13th Edition
0324258755, 9780324258752
