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As CFO of a manufacturing company, you are looking to optimize the interest costs of a recent borrowing. The loan carries a fixed interest rate of 8%.

A. If you enter into a LIBOR swap where you agree to pay LIBOR and receive 6.5%, what will be your effective borrowing cost?

B. What does the strategy in A say about your view of future interest rates?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92747525

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