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Company X wants to borrow $10,000,000 floating for 5 years; company Y wants to borrow $10,000,000 fixed for 5 years. Their external borrowing opportunities are

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Company X wants to borrow $10,000,000 floating for 5 years; company Y wants to borrow $10,000,000 fixed for 5 years. Their external borrowing opportunities are shown below: Company Fixed-rate borrowing Floating-rate borrowing cost cost 10% LIBOR Y 12% LIBOR+1.5% A swap bank is involved and quotes the following rates five-year dollar interest rate swaps at 10.05%-10.45% against LIBOR flat. Assume company Y has agreed, but company X will only agree to the swap if the bank offers better terms. What are the absolute best terms the bank can offer X, given that it already booked Y? 10.45%-10.45% against LIBOR flat. 10.45%-10.05% against LIBOR flat. O 10.50%-10.50% against LIBOR flat. None of the above

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