Question
Desert Trading Company has issued $100 million worth of long-term bonds at a fixed rate of 9%. The firm then enters into an interest rate
Desert Trading Company has issued $100 million worth of long-term bonds at a fixed rate of 9%. The firm then enters into an interest rate swap where it pays a LIBOR rate of 6% and receives a fixed 6% on notional principal of $100 million. What is the firm's effective interest rate on its borrowing?
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Analysis for Financial Management
Authors: Robert Higgins
11th edition
77861787, 978-0077861780
