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HOW MUCH CAN THE SWAP BANK EARN ON THE POUND LOANS? Company A a U.S. MNC) wants to borrow 10,000,000 at a fixed rate for
HOW MUCH CAN THE SWAP BANK EARN ON THE POUND LOANS?
Company A a U.S. MNC) wants to borrow 10,000,000 at a fixed rate for five year. Company B (a U.K. MNC) wants to borrow $16,000,000 at a fixed rate for five year. Today's exchange rate is 1= $1.6. The information below summarizes what each company can do without using swaps. $ Loans Loans Company A 8.1 11.7 Company B 10.5 12.1 If Company A wants to save 0.3% of the 10,000,000 loan through a Swap Bank, and If Company B wants to save 0.2% of the $16,000,000 loan through a Swap Bank. How much can the Swap bank earn on pound () loans (in terms of %) after meeting Company A and Company B's demand? (if your answer is 1.34%, just enter "1.34". If your answer is -1.34%, just enter"-1.34")
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