Question: Intel borrowed a floating-rate loan at LIBOR and Microsoft borrowed a fixed-rate loan at 4.9% per annum. Two companies then enter into a swap contract
Intel borrowed a floating-rate loan at LIBOR and Microsoft borrowed a fixed-rate loan at 4.9% per annum. Two companies then enter into a swap contract in which Intel receives LIBOR from and pays 5% to Microsoft on the same amount of notional principal. What are the actual interest rates paid by Intel and Microsoft after they enter into the swap contract?
a. 5% and LIBOR-0.1%
b. LIBOR and 4.9%
c. 4.9% and LIBOR
d. LIBOR+0.1% and 5%
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