Companies a and b face the following interest rates nbsp, Ask an Expert

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Companies A and B face the following interest rates: A Company B

US Dollars (floating rate) LIBOR+0.5% LIBOR+1.0%

Canadian dollars (fixed rate) 5.2% 7.01%

Assume that A wants to borrow U.S. dollars at a floating rate of interest and B wants to borrow Canadian dollars at a fixed rate of interest. A financial institution is planning to arrange a swap and requires a 50-basis-point spread. If the swap is equally attractive to A and B, what rates of interest would B end up paying?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92166969

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