5. Consider companies A and B who both wish to borrow 50mm for 5 years. They...
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5. Consider companies A and B who both wish to borrow 50mm for 5 years. They are faced with the following options: Type of Borrowing Fixed Float Company A 5.00% LIBOR - 0.50% Company B 7.00% LIBOR + 0.50% Company A wishes to borrow at a floating rate and Company B wishes to borrow at a fixed rate. Provide a diagram of the swap and structure a swap which will be mutually beneficial. 5. Consider companies A and B who both wish to borrow 50mm for 5 years. They are faced with the following options: Type of Borrowing Fixed Float Company A 5.00% LIBOR - 0.50% Company B 7.00% LIBOR + 0.50% Company A wishes to borrow at a floating rate and Company B wishes to borrow at a fixed rate. Provide a diagram of the swap and structure a swap which will be mutually beneficial.
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