Consider the following borrowing costs faced by the following 3 companies: Company A Fixed rate 7.0% Floating
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Question:
Consider the following borrowing costs faced by the following 3 companies:
Company A
Fixed rate
7.0%
Floating rate
LIBOR + 0.1%
Company B
Fixed rate
6.5%
Floating rate
LIBOR - 0.1%
Company C
Fixed rate
7.3%
Floating rate
LIBOR + 0.2%
If company A wants to borrow floating-rate funds, what is the lowest possible cost of funds that this company could achieve? Assume that if any two companies enter into the swap transaction, they split the possible savings equally.
Hint: consider all possible ways that company A could borrow floating-rate funds.
HW DATA
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AutoSave Off Search Review View Help HW3_data(1) - Compatibility Mode Word Mailings Α Αν Aa AEE T x AaBbCcl AaBbC AaBbCcI AaBbCc] AaBbCcD Emphasis Heading 1 Normal Strong Subtitle File Home Insert Design Layout References Times New Rom 12 x Paste BI U ab x₂ x² A v DA✓ Clipboard Font Navigation Search document 0 ✓ Headings Pages Results Daily Settlements for Eurodollar Futures (FINAL)... Page 1 of 1 242 words H Type here to search Paragraph о Б S Styles A Priyak Parvez PP Share Comments Find Replace Select Dictate Sensitivity Editor > Editing Voice Sensitivity Editor Daily Settlements for Eurodollar Futures (FINAL) Trade Date: 02/24/2021 (Wednesday) Prior Day Low Estimated Month Open High Last Change Settle Volume MAR 21 99.8375 99.8425 99.8325 99.8350-0050 99.8350 212,701 APR 21 109.9850 109.9850 109.9840 109.9850 -.0050 99.8500 5,674 MAY 21 99.8550 99.8550 99.8450 99.8500 -.0050 99.8500 3,027 JUN 21 99.8550 99.8550 99.8400 99.8450-0050 99.8450 139,383 JLY 21 99.8500|99.8500 | 99.8450 | 99.8450|-.0050 99.8450 621 Open Interest 1,075,658 57,652 16,817 1,111,270 7,412 Daily Settlements for Eurodollar Futures (FINAL) Trade Date: 02/26/2021 (Friday) Month Ореш High Low Last Estimated Volume Prior Day Open Interest 254,930 1,059,745 66,121 Change Settle MAR 21 99.8175 99.8250 99.8150 99.8200 -.0025 99.8200 APR 21 109.9830 109.9840 109.9825 109.9840 -.0100 99.8300 32,206 MAY 21 99.8350 99.8400 99.8250 99.8400 -.0100 99.8300 10,262 JUN 21 99.8300 99.8400 99.8150 99.8350-0050 99.8300 353,085 JLY 21 99.8250 99.8300 99.8200 99.8300 -.0100 99.8250 1,752 20,860 1,132,124 7,334 Daily Settlements for Eurodollar Futures (FINAL) Trade Date: 03/01/2021 (Monday) Monch Open High Low Last Change Settle MAR 21 99.8200 99.8300 99.8175 99.8300 +.0075 99.8275 APR 21 109.9830 109.9840 109.9830 109.9840 +0100 99.8400 MAY 21 99.8350 99.8450 99.8350 99.8400 +0100 99.8400 JUN 21 99.8400 99.8450 99.8300 99.8450 +0100 99.8400 JLY 21 99.8350 99.8400B 99.8350 99.8400B +0100 99.8350 Prior Day Estimated Volume Interest 121,969 1,066,052 5,051 76,673 1,156 22,512 133,756 1,081,375 8,377 Open 3-month LIBOR rate: February 23, 2021 0.18750 February 24, 2021 0.18975 February 25, 2021 0.19050 February 26, 2021 0.18838 March 1, 2021 0.18425 Ο Focus 3:35 PM 3/15/2021 + 60% 見 8 AutoSave Off Search Review View Help HW3_data(1) - Compatibility Mode Word Mailings Α Αν Aa AEE T x AaBbCcl AaBbC AaBbCcI AaBbCc] AaBbCcD Emphasis Heading 1 Normal Strong Subtitle File Home Insert Design Layout References Times New Rom 12 x Paste BI U ab x₂ x² A v DA✓ Clipboard Font Navigation Search document 0 ✓ Headings Pages Results Daily Settlements for Eurodollar Futures (FINAL)... Page 1 of 1 242 words H Type here to search Paragraph о Б S Styles A Priyak Parvez PP Share Comments Find Replace Select Dictate Sensitivity Editor > Editing Voice Sensitivity Editor Daily Settlements for Eurodollar Futures (FINAL) Trade Date: 02/24/2021 (Wednesday) Prior Day Low Estimated Month Open High Last Change Settle Volume MAR 21 99.8375 99.8425 99.8325 99.8350-0050 99.8350 212,701 APR 21 109.9850 109.9850 109.9840 109.9850 -.0050 99.8500 5,674 MAY 21 99.8550 99.8550 99.8450 99.8500 -.0050 99.8500 3,027 JUN 21 99.8550 99.8550 99.8400 99.8450-0050 99.8450 139,383 JLY 21 99.8500|99.8500 | 99.8450 | 99.8450|-.0050 99.8450 621 Open Interest 1,075,658 57,652 16,817 1,111,270 7,412 Daily Settlements for Eurodollar Futures (FINAL) Trade Date: 02/26/2021 (Friday) Month Ореш High Low Last Estimated Volume Prior Day Open Interest 254,930 1,059,745 66,121 Change Settle MAR 21 99.8175 99.8250 99.8150 99.8200 -.0025 99.8200 APR 21 109.9830 109.9840 109.9825 109.9840 -.0100 99.8300 32,206 MAY 21 99.8350 99.8400 99.8250 99.8400 -.0100 99.8300 10,262 JUN 21 99.8300 99.8400 99.8150 99.8350-0050 99.8300 353,085 JLY 21 99.8250 99.8300 99.8200 99.8300 -.0100 99.8250 1,752 20,860 1,132,124 7,334 Daily Settlements for Eurodollar Futures (FINAL) Trade Date: 03/01/2021 (Monday) Monch Open High Low Last Change Settle MAR 21 99.8200 99.8300 99.8175 99.8300 +.0075 99.8275 APR 21 109.9830 109.9840 109.9830 109.9840 +0100 99.8400 MAY 21 99.8350 99.8450 99.8350 99.8400 +0100 99.8400 JUN 21 99.8400 99.8450 99.8300 99.8450 +0100 99.8400 JLY 21 99.8350 99.8400B 99.8350 99.8400B +0100 99.8350 Prior Day Estimated Volume Interest 121,969 1,066,052 5,051 76,673 1,156 22,512 133,756 1,081,375 8,377 Open 3-month LIBOR rate: February 23, 2021 0.18750 February 24, 2021 0.18975 February 25, 2021 0.19050 February 26, 2021 0.18838 March 1, 2021 0.18425 Ο Focus 3:35 PM 3/15/2021 + 60% 見 8
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