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I know the first blank is 4.9% and the last blank is .15% but I am struggling with the answers in between! Counterparties X and
I know the first blank is 4.9% and the last blank is .15% but I am struggling with the answers in between!
Counterparties X and Y require $50,000,000 for 5 years. Based on their credit ratings Counterparties X (BBB rating) and Y (AAA) rating have the borrowing options in the table below. The rates are annual interest rates. "Original" Terms: Counterparty Fixed Rate Floating Rate 5% 6-month LIBOR + .25% 4.4% 6-month LIBOR Suppose the Swap Bank offers the following quote against dollar LIBOR: 4.50-4.65%. Party X: Gets floating rate loan from its bank but WANTS to swap into fixed payments by paying the swap bank 4.65% against receiving LIBOR. Party Y: Gets fixed rate loan from its creditors but WANTS swap into floating payments lower than LIBOR, by paying the swap bank LIBOR against receiving 4.5% Complete the following sentences. 1. Company X's net interest after the swap will be (A) %. Therefore, compared to their independent options, they will save a total over 5 years of (B) dollars. 2. Company Y's net interest after the swap will be (A)| %. Therefore, compared to their independent options, they will save a total over 5 years of (B) dollars. 3. What percent does the swap dealer makeStep by Step Solution
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