Question
) Use the following table to design a swap that is equally attractive to both firms: Fixed Floating Firm AAA 10% LIBOR+.5% Firm BBB 11%
) Use the following table to design a swap that is equally attractive to both firms:
| Fixed | Floating | |
| Firm AAA | 10% | LIBOR+.5% |
| Firm BBB | 11% | LIBOR+3% |
| Spread | ? | ? |
Suppose firm AAA wants a fixed rate loan and Firm BBB wants floating.
Draw the swap diagram and show all the cash flows like we did in class.
Solve for fixed amount that makes the swap work.
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Principles Of Managerial Finance
Authors: Lawrence J Gitman, Chad J Zutter
7th Edition
0133546403, 9780133546408
