Answered step by step
Verified Expert Solution
Link Copied!

Question

00
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 at

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. 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 with AI-Powered 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

Students also viewed these Finance questions