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There are two firms that wish to conduct a comparative advantage swap, their respective borrowing rates in the fixed and floating markets are in the
There are two firms that wish to conduct a comparative advantage swap, their respective borrowing rates in the fixed and floating markets are in the table: Fixed % Floating % Firm A 7.3 Libor+3.5 Firm B 6.9 Libor+1.3 What is the total or combined interest rate savings for both firms from conducting the swap? (Answer in basis points. E.g. .30% is 30 basis points)
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