The writer is very fast, professional and responded to the review request fast also. Thank you.
Company A, a low-rated firm, desires a fixed-rate, long-term loan. Company A presently has access to floating interest rate funds at a margin of 1.5% over LIBOR. Its direct borrowing cost is 13% in the fixed-rate bond market. In contrast, company B, which prefers a floating-rate loan, has access to fixed-rate funds at 11% and floating-rate funds at LIBOR+0.5%. Suppose both companies enter into an interest rate swap and split the spread differential; that is, they share the spread differential equally.
With the swap deal, what interest rate would Company B pay for its floating-rate funds?
Note: You can just assume that both companies enter into the swap directly with each other without going through a bank, or you can assume that they go through a bank but the gain to the bank is zero.
Select one:
a. LIBOR+.5%b. LIBOR-.02%c. LIBOR+.2%d. LIBOR+0%
Show more
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more