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I would be very happy if you explain the processes and how they are done with the steps. thank you in advance Company A, a

I would be very happy if you explain the processes and how they are done with the steps. thank you in advance

  1. Company A, a Turkish manufacturer, wishes to borrow U.S. dollars at a fixed rate of interest. Company B, a US multinational, wishes to borrow Turkish lira at a fixed rate of interest. They have been quoted the following rates per annum (adjusted for differential tax effects):

TRY

US Dollars

Company A

9.0%

2.8%

Company B

8.6%

0.2%

Design a swap that the bank will receive , acting as intermediary, 0.2% per annum and that will produce a gain of equal basis points per annum for each of the two companies.

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