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Homework answers / question archive / Companies X and Y have been offered the following rates per annum on a $5 million 10-year investment:   Fixed Rate Floating Rate Company   X 8

Companies X and Y have been offered the following rates per annum on a $5 million 10-year investment:   Fixed Rate Floating Rate Company   X 8

Accounting

Companies X and Y have been offered the following rates per annum on a $5 million 10-year investment:

 

Fixed Rate

Floating Rate

Company   X

8.0%

LIBOR

Company   Y

8.8%

LIBOR

Company X requires a fixed-rate investment; Company Y requires a floating-rate investment. Design a swap that will net a bank, acting as intermediary, 0.2% per annum and will appear equally attractive to X and Y.

 

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