Question
Companies A and B have been offered the following rates per annum on a 10 million kr 4-year investment: Company a fixed rate: 6% and
Companies A and B have been offered the following rates per annum on a 10 million kr 4-year investment:
Company a fixed rate: 6% and floating rate is LIBOR
Company b fixed rate : 6.6% and floating rate is LIBOR + 0.1%
Design a swap between company A and company B that is equally attractive to both companies, if company A requires a fixed-rate investment and company B requires a floating-rate investment?
Not sure how to solve this problem, I would like to understand how to do this. Thank you in advance
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Essentials of Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
10th edition
77835425, 978-0077835422
