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Companies AAA and BBB have been offered the following rates per annum on a $20 million five-year loan: Fixed Rate Floating Rate Company AAA 5.0%
Companies AAA and BBB have been offered the following rates per annum on a $20 million five-year loan: Fixed Rate Floating Rate Company AAA 5.0% LIBOR+0.2% Company BBB 6.4% LIBOR+0.6% Company AAA requires a floating-rate loan, company BBB 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. The swap arrangement below. A. B. Bank D. F. AAA BBB c. E. A. is B. is C. is D. is E. is F. is
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