1. What is the maximum possible cost savings to Axil from engaging in acurrency swap with Bevel?

2. What is the maximum possible cost savings to Bevel from engaging in acurrency swap with Axil?

Axil Corp. has not tapped the Deutsche mark public debt market because of concern about a likely appreciation of that currency and only wishes to be a floating-rate dollar borrower, which it can be at LIBOR + 1%. Bevel Corp. strongly prefers fixed-rate DM debt, but it must pay 1.5% more than the 6.25% coupon that Axil's DM notes would carry. Bevel, however, can obtain Eurodollars at LIBOR + ½%.

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The question is based on the concept of interest rate and currency swaps detailed as below DollarDen... View the full answer