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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 6.2% on notional principal of $100 million. What is the firms effective interest rate on its borrowing?
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