Question: Company A can issue floating-rate debt at LIBOR +1%, and it can issue fixed rate debt at 9%. Company B can issue floating-rate debt at

 Company A can issue floating-rate debt at LIBOR +1%, and it

Company A can issue floating-rate debt at LIBOR +1%, and it can issue fixed rate debt at 9%. Company B can issue floating-rate debt at LIBOR + 1.5%, and it can issue fixed-rate debt at 9.4%. Suppose A issues floating-rate debt and B issues fixed-rate debt, after which they engage in the following swap: A will make a fixed 7.95% payment to B, and B will make a floating-rate payment equal to LIBOR to A. What are the resulting net payment of A and B? A pays a fixed rate of 9%, B pays LIBOR+1.5% A pays a fixed rate of 8.95%, B pays LIBOR+1.45% A pays LIBOR plus 1%, |B pays a fixed rate of 9.4% A pays a fixed rate of 7.95%, B pays LIBOR none of the above answers is correct

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