Desert Trading Company has issued $100 million worth of long-term bonds at a fixed rate of 7%.
Question:
Desert Trading Company has issued $100 million worth of long-term bonds at a fixed rate of 7%. The firm then enters into an interest rate swap where it pays LIBOR and receives a fixed 6% on notional principal of $100 million. What is the firm’s effective interest rate on its borrowing?
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To calculate the firms effective interest rate on its borrowing after entering into the interest rat...View the full answer
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Related Book For 
ISE Investments
ISBN: 9781260571158
12th International Edition
Authors: Zvi Bodie, Alex Kane, Alan Marcus
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