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Company A can borrow at a floating rate equal to Libor +1% or at a fixed rate of 7%. Company B can borrow at a

Company A can borrow at a floating rate equal to Libor +1% or at a fixed rate of 7%. Company B can borrow at a floating rate of Libor+ 2% or at a fixed rate of 9.5%.

Company A wants to borrow at a floating-rate, whereas Company B desires a fixed-rate loan. Construct a swap between Company A and B, where they will be equally benefited from this swap.

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