question 22

Consider the following information for an interest rate swap contract between companies A and B.

1. Company A can borrow from a bank at 8% fixed or LIBOR + 19% floating (preference is borrowing at fixed rate)

2. Company B can borrow from a bank at 9.6% fixed or LIBOR + 1.5% (reference is borrowing at floating rate)

3. Company A prefers floating, and Company B prefers

from this information in which interest rate market company B has comparative advantages and why