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The company FB originally wanted to borrow at a fixed rate of 5.6%. However, based on the comparative advantage it borrowed at the floating rate
The company FB originally wanted to borrow at a fixed rate of 5.6%. However, based on the comparative advantage it borrowed at the floating rate of LIBOR + 227 bp. The company entered into an interest rate swap to reduce its borrowing cost. How much does FB save via this interest rate swap (relative to 5.6%)? The swap rate was 2.5%. There was no swap dealing transaction
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