Question
Companies A and B have been offered the following rates per annum on a $10 million five-year loan: Fixed Rate Floating Rate Company A 5.25%
Companies A and B have been offered the following rates per annum on a $10 million five-year loan:
| Fixed Rate | Floating Rate | ||
| Company A | 5.25% | LIBOR + 0.35% | |
| Company B | 6.85% | LIBOR + 1.0% | |
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, 0.2% per annum and that will appear equally attractive to both companies.
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International Finance The Markets And Financial Management Of Multinational Business
Authors: Maurice D. Levi
3rd Edition
0070376875, 978-0070376878
