Question: Fixed Rate Floating Rate Company A 6.50% LIBOR + 1.75% Company B 7.75% LIBOR + 2.25% Assuming comparative advantage and the agreed upon rate of

Fixed Rate Floating Rate

Company A 6.50% LIBOR + 1.75%

Company B 7.75% LIBOR + 2.25%

Assuming comparative advantage and the agreed upon rate of 7.30% for both companies, after entering into an interest rate swap determine the cost of financing for Company A and Company B. Who are the main users of interest swaps and currency swaps?

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