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.
