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The table below presents the costs of borrowing for Walmart and Caterpillar, and the a Swap Bank quote against LIBOR. Walmart would like to get
The table below presents the costs of borrowing for Walmart and Caterpillar, and the a Swap Bank quote against LIBOR. Walmart would like to get a floating rate loan. Caterpillar would like to get a fixed rate loan. What is the value to the Swap Bank if both Walmart and Caterpillar enter a swap agreement? Fixed-Rate Floating Rate Borrowing Cost Borrowing Cost 11.00 LIBOR 14.00 LIBOR +2.60 Caterpill Quote Bid 11.15% 11.28% 13 bps 28 bps 15 bps 12 bos None of the above
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