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Two companies, Company A and Company B , are looking to enter into an interest rate swap agreement. Fixed rateFloating RateCompany A 5 % 3
Two companies, Company A and Company B are looking to enter into an interest rate swap agreement. Fixed rateFloating RateCompany Amonth LIBOR plus Company Bmonth LIBOR plus Suppose that company A requires a floatingrate borrowing and company B requires a fixedrating borrowing. A financial institution is planning to arrange a swap and requires bps spread. If benefits are equally shared both companies, what rate of interest will A and B pay?
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