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Question 16 3 pts Companies A and B have been offered the following rates per annum on a $20 million 5-year loan, and a bank,
Question 16 3 pts Companies A and B have been offered the following rates per annum on a $20 million 5-year loan, and a bank, acting as intermediary, will charge 0.20% per annum (20 basis points) to arrange and manage the swap, which appears equally attractive to A and B. Hint: draw the diagram for the entire swap and you will find the answer to this question as well as the following four questions. Fixed Rate Floating Rate Company A 4.7% LIBOR Company B 5.5% LIBOR + 0.20% Company A requires a floating-rate loan, and company B requires a fixed-rate loan. What is the economic gain to each firm, net of the bank's fee? (please enter your answers as percentages, for instance answer 9.0 to indicate 9.0%, or 0.50 to indicate 0.50%)
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