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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 6.0%
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 6.0% LIBOR+0.1% Company B 7.5% LIBOR+0.7% 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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