Kobayasho and Maru corporations both seek funding at the lowest possible cost. They face the following rate structure:

(Draw a a 5) Kobayashi and Maru corporations both seek funding at the lowest possible cost. They face the following rate structure" Credit rating Cost of fixed-rate borrowing Cost of floating-rate borrowing Kobavaski 10.0% LIBOR + .50/0 Maru 13.0% LIBOR +1.0% a) In what type of borrowing does Kobayashi have the greatest comparative advantage? Why? b) In what type of borrowing does Maru have the least comparative disadvantage? Why? c) If a swap were arranged, what is the maximum savings that could be divided between the two parties? d) Describe a swap transaction that would generate these savings. Assume the savings is divided equally between the two firms.