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Suppose Siemens Corporation would like to borrow fixed-rate yen and can either borrow yen at a fixed interest rate of 4.5% or floating-rate dollars at
Suppose Siemens Corporation would like to borrow fixed-rate yen and can either borrow yen at a fixed interest rate of 4.5% or floating-rate dollars at LIBOR +0.25%. The Singapore Development Bank would like to borrow floating-rate dollars and can borrow either fixed-rate yen at 4.9% or floating-rate dollars at LIBOR +0.8%. Which of the following statements is correct? Select one: A. The swap results in combined savings of 15 basis points. B. The swap results in combined savings of 55 basis points. C. The swap results in combined savings of 40 basis points. D. Siemens has an absolute borrowing advantage and should not swap. E. Singapore Development Bank has a relative borrowing advantage and should not swap
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