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The table below presents the costs of borrowing for ExxonMobil and Caterpillar, and the a Swap Bank quote against LIBOR. ExxonMobil would like to get

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The table below presents the costs of borrowing for ExxonMobil and Caterpillar, and the a Swap Bank quote against LIBOR. ExxonMobil would like to get a floating rate loan. Caterpillar would like to get a fixed rate loan. How much can Caterpillar save by entering a swap agreement in bps? Fixed-Rate Floating-Rate Borrowing Cost Borrowing Cost 9.00 LIBOR 11.00 LIBOR 1.20 Exxon Mobil Caterpillar Swap Bank Quote Bid 9.20% Ask 9.63% 17 bps 63 bps 20 bps 43 bps None of the above

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