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Suppose that Delta wants to borrow 32 million CAD and Air Canada wants to borrow 24 million USD. Each firm is offered the following
Suppose that Delta wants to borrow 32 million CAD and Air Canada wants to borrow 24 million USD. Each firm is offered the following loan rates. Firm Delta 1:41 Air Canada U.S. Bank Rate (USD) 5.7% 6.3% Canadian Bank Rate (CAD) 6.8% 7.1% Design a swap where a financial intermediary gets 0.08% of margin and takes all the exchange rate risk. Each firm evenly splits the remaining spread margin. As a result of the swap, at what rate is Air Canada effectively borrowing in USD? Use the Currency Swap Template to answer the question. Please report your answer in percentage. 7.22% would be 7.22. Numeric Response Prev 14 of 33 # Next >
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