Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Company A ( a U . S . MNC ) wants to borrow 1 0 , 0 0 0 , 0 0 0 at a

Company A (a U.S. MNC) wants to borrow 10,000,000 at a fixed rate for five year. Company B (a U.K. MNC) wants to borrow $16,000,000 at a fixed rate for five year. Today's exchange rate is 1= $1.6. The information below summarizes what each company can do without using swaps.
$ Loans Loans
Company A 811.8
Company B 10.712.4
If Company A wants to save 0.3% of the 10,000,000 loan through a Swap Bank, and If Company B wants to save 0.2% of the $16,000,000 loan through a Swap Bank. How much can the Swap bank earn on pound () loans (in terms of %) after meeting Company A and Company B's demand? (if your answer is 1.34%, just enter "1.34". If your answer is -1.34%, just enter "-1.34").

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management For Public Health And Not For Profit Organizations

Authors: Steven A. Finkler

4th International Edition

0132912813, 9780132912815

More Books

Students also viewed these Finance questions

Question

What proactive strategies might you develop?

Answered: 1 week ago

Question

How does your message use verbal communication?

Answered: 1 week ago