Question: Answer is correct if you could please show how to solve. Thanks! 9. The table below presents the costs of borrowing for Verizon and Amazon,

Answer is correct if you could please show how to solve. Thanks!

9. The table below presents the costs of borrowing for Verizon and Amazon, and the a Swap Bank quote against LIBOR. Verizon would like to get a floating rate loan. Amazon would like to get a fixed rate loan. What is the value to the Swap Bank if both Verizon and Amazon enter a swap agreement? Fixed-Rate Floating-Rate Borrowing Cost Borrowing Cost 7.00 LIBOR 8.50 LIBOR + 0.80 Verizon Amazon Swap Bank Quote Bid 7.13% Ask 7.60% (a) 60 bps (b) 13 bps (c) 10 bps (d) 47 bps (e) None of the above

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