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Microsoft can borrow at 3.5% or LIBOR plus 10 basis points. General Motors can borrow at 4.5% or LIBOR plus 30 basis points. Assume that
Microsoft can borrow at 3.5% or LIBOR plus 10 basis points. General Motors can borrow at 4.5% or LIBOR plus 30 basis points. Assume that Microsoft borrows fixed and General Motors borrows floating. If they enter into a swap with each other where the apparent benefits are shared equally, Microsofts effective borrowing rate will be LIBOR plus how many basis points? (Answer can be negative or postiive)
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