Company A: The swap could have the effect of transforming an asset earning a floating rate of interest into an asset earning a fixed rate. Suppose that A has an investment of $100 million that yields the LIBOR rate minus 25 basis points. Company B: The swap could have the effect of transforming an asset earning a fixed rate of interest into an asset earning a floating rate. Suppose that B owns $100 million in bonds that will return 4.7%. Can you find out effective rates for Company A and B? LIBOR LIBOR - 0.25% A B 5% 4.7%