Suppose a Bank Can Borrow Five- Year Fixed- Rate Funds

question 15

True/False

Suppose a bank can borrow five- year fixed- rate funds at 9% p.a. and floating rate at BBR (bank bill rate). Assume a company must pay 11% fixed and (BBR + 2%) for floating. Then there is no scope for a profitable swap because the bank is better off in both markets going it alone.

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Definitions:

Competitive Advantage Strategies

Plans and actions taken by a company to ensure it has a unique position in the market, outperforming competitors or offering unique value to customers.

Operational Excellence

The pursuit of conducting business in a manner that continuously improves performance and delivers value through efficient processes, innovation, and quality management.

Product Leadership

A market strategy focus, where a company aims to continuously offer one of the most innovative and high-quality products in the market.

Customer Intimacy

A business strategy that focuses on personalization and customer care, creating close relationships with customers to understand and meet their needs in a unique way.