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on Compai A desires a fixed-rate loan but currently has a better deal from the variable-rate market at a rate of LIBOR+.07. If Company A

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on Compai A desires a fixed-rate loan but currently has a better deal from the variable-rate market at a rate of LIBOR+.07. If Company A borrows from the fixed-rate market, the cost would be 18. In contrast, Company B, which prefers a variable-rate loan, has a better deal from the fixed-rate market at . 13. If Company B borrows from the varible-rate market, the cost would be LIBOR+.06. Knowing both companies' needs, Bank C designed a swap deal. The deal is outlined in the following: 1) Company A obtains a variable-rate loan at LIBOR+.07 2) Company B obtains a fixed-rate loan at 13. 3) Company A pays Bank C a fixed rate of 135 and receives a variable rate of LIBOR+ 04 from the bank. 4) Company B pays Bank Ca variable rate of LIBOR+ 04 and receives a fixed rate of 13 from the bank How much is the gain to Bank C

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