Question
Company XYZ is thinking about getting into a 7% fixed rate loan. Right now, it could borrow money from Eurodollar market using 6-month LIBOR contract.
Company XYZ is thinking about getting into a 7% fixed rate loan. Right now, it could borrow money from Eurodollar market using 6-month LIBOR contract. There is a swap contract that matches the fixed-coupon bon and LIBOR well. What should company XYZ do in order to convert the Eurodollar borrowing into a fixed-pay bond?
A.)Entering a swap that pays fixed and receive-floating LIBOR
B.) Entering a swap that pay floating LIBOR and receive fixed rate
C.) Entering a swap that pay fixed and receive another floating rate
D.) Entering a swap that pay fixed and receive another fixed
E.) None of above
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