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please do it in 10 minutes will upvote 6. Companies X and Y have been offered the following rates per annum on a $5 million
please do it in 10 minutes will upvote
6. Companies X and Y have been offered the following rates per annum on a $5 million 10- year investment: Fixed Rate Floating Rate Libor 8.0% Company X Company Y 8.8% Libor (a) Company X requires a fixed-rate investment; company Y requires a floating-rate investment. Design a swap that will net a bank, acting as intermediary, 0.2% per annum and will appear equally attractive to X and Y. (20 marks) (b) Analyse the comparative-advantage argument for a plain "vanilla swap" (interest rate swap) using an example. (20 marks) (Total: 40 marks)Step by Step Solution
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