Question
Desert Trading Company has issued $100 million worth of long-term bonds at a fixed rate of 12%. 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 12%. The firm then enters into an interest rate swap where it pays a LIBOR rate of 6% and receives a fixed 6.5% on notional principal of $100 million. What is the firms effective interest rate on its borrowing?
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National Finance A Chinese Perspective
Authors: Yunxian Chen, Heming Yong
1st Edition
9813360917, 978-9813360914
