Libor rate for 3-months is 1.2%. ABC company has a fixed rate loan of 8%, euros, and CDE has a floating rate 7.1% plus 3-month Libor rate, US$. ABC wants to borrow a floating rate of 6% plus Libor rate US$. And CDE wants to borrow a fixed rate loan of 8.5% on euros. (Ch. 9)

What is the possible savings for ABC? (8 points)
If notional amount is US $100 million with a current exchange rate of 0.9198 euros to US$1, what are the savings in terms of euros? (8 points)

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ANSWER The possible savings for ABC would be 03 This is because ABC would be paying a lower interest ... View the full answer