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 12.0%
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 12.0% LIBOR+0.1%
Company B 13.4% LIBOR+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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Public Finance A Contemporary Application Of Theory To Policy
Authors: David N Hyman
12th Edition
0357442156, 978-0357442159
