Question: answer i and ii. show workings and formulas A Ltd, a low rated firm desires a fixed rate, long term loan. It currently has access

answer i and ii. show workings and formulas A

answer i and ii. show workings and formulas A Ltd, a low rated firm desires a fixed rate, long term loan. It currently has access to floating interest rate funds at a margin of 1.5% over the Prime Rate. Its direct borrowing cost is 13% in the fixed rate bond market. B Ltd which prefers a floating rate loan has access to fixed rate funds in cedi-bond market at 11% and floating rate funds at Prime Rate + 12%. You are required: O) To explain how A Ltd and B Ltd can use swap to their advantage. (ii) Calculate how much Asaba Ltd would pay for its fixed rate funds

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