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Companies A and B face the following interest rates (adjusted for the differential impact of taxes)

Assume that A wants to borrow US 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 to appear equally attractive to A and B, what rates of interest will A and B end up paying?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91991863

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