Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
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 8 11.6 Company B 10.8 12.1 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 dollar 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

Public Finance

Authors: H L Bhatia

30th Edition

9390080258, 978-9390080250

More Books

Students also viewed these Finance questions