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Suppose two firms want to borrow money from a bank for a period of one year. Firm A has excellent credit, whereas Firm B's credit standing is such that it would pay prime + 3 percent.

The current prime rate is 7 percent, the 30-year Treasury bond yield is 4 percent, the three-month Treasury bill yield is 3 percent, and the 10-year Treasury note yield is 4 percent. What are the appropriate loan rates for each firm?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92857700

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