Answered step by step
Verified Expert Solution
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
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
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started