Question: Samsung borrowed a floating-rate loan at LIBOR and IBM borrowed a fixed-rate loan at 4.9% per annum. The companies then enter into a swap contract

Samsung borrowed a floating-rate loan at LIBOR and IBM borrowed a fixed-rate loan at 4.9% per annum. The companies then enter into a swap contract in which Samsung receives LIBOR from and pays 5% to IBM on the same amount of notional principal. What are the actual interest rates paid by Samsung and IBM after they enter into the swap contract?

  1. 5% and LIBOR-0.1%
  2. LIBOR and 4.9%
  3. 4.9% and LIBOR
  4. LIBOR+0.1% and 5%

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