Question
I need an example of an interest rate swap where I am the dealer and in the interest rate swap (between two companies) I have
I need an example of an interest rate swap where I am the dealer and in the interest rate swap (between two companies) I have to make a spread of 50 basis points (0.5%).
For example, Company A has an investment of $10,000 with a fixed interest rate of 9.5% and Company B has an investment of $15,000 with a floating interest rate of 10%. Company A wants to move to a floating interest rate and B wants to move to a fixed interest rate. Somehow I as the dealer needs to earn 0.5%. The math used is just an example so you can change it to whatever will work.
This was just my example I created to show what I am looking for you can add more detail if needed. I am confused how the swap dealer would earn 50 basis points so I am not sure how I would do the math to make this happen?
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