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Probio Ltd, an Australian biomedical firm, wishes to borrow US dollars at a floating rate of interest while Shale Inc

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Probio Ltd, an Australian biomedical firm, wishes to borrow US dollars at a floating rate of interest while Shale Inc., a US investment firm, wishes to borrow Australian dollars at a fixed rate of interest. The companies have been quoted the following interest rates. The dealer requires 20 basis points per annum.

USD                     AUD                

Probio Ltd:                                      LIBOR + 3.0%     7.5% Fixed

Shale Inc:                                        LIBOR + 1.5%     6.8% Fixed       

If Probio Ltd. and Shale Inc. enter a swap with the dealer, how much would Shale Inc. pay the dealer?

Group of answer choices

A. AUD 6.3% Fixed

B. AUD 6.5% Fixed

C. USD floating LIBOR + 1.5%

D. USD floating LIBOR + 1.2%