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You work for a bank and Apple and Microsoft both approached you about converting a loan. They have been offered the following rates per annum
You work for a bank and Apple and Microsoft both approached you about converting a loan. They have been offered the following rates per annum on a $10 million 5-year loan. Apple Microsoft Fixed rate 4.0% 4.8% Floating rate LIBOR + 0.1% LIBOR + 0.3% Apple requires a floating-rate loan; Microsoft a fixed-rate loan. Design a swap that will net the bank, acting as intermediary, 0.08% per annum and that will appear equally attractive to both companies. Illustrate it with a graph
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