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Counterparties AA and BB face the following borrowing costs in the marketplace: AA desires a floating rate loan while BB desires a fixed rate loan.

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Counterparties AA and BB face the following borrowing costs in the marketplace: AA desires a floating rate loan while BB desires a fixed rate loan. A dealer stands ready to pay 5.90% fred rate against recelving a floating rate of 3.85% or receive a foxed rate of 6.30s against paying a floating rate of 4%. Assume that each party explolis its relative advantage and swaps with the other as proposed by the dealer: Then The net cost of desired firaneing for AA and B8 are respectively. 4.40s and 7.505 4.75K and 750K 4.400and7.60K 3.55 and 6.40x

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