Question
If a firm has borrowed $5m at a floating rate of LIBOR + 75 basis points, and then enters into a swap to receive LIBOR
If a firm has borrowed $5m at a floating rate of LIBOR + 75 basis points, and then enters into a swap to receive LIBOR and pay 6% fixed on $5m notional, what is the firm's effective interest rate on its borrowing?
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Managerial Economics and Organizational Architecture
Authors: James Brickley, Clifford W. Smith Jr., Jerold Zimmerman
6th edition
73523143, 73523149, 978-0073523149
