A Firm Can Borrow at a Floating Rate of LIBOR

question 1

Multiple Choice

A firm can borrow at a floating rate of LIBOR + 1% on short-term loans.If it swaps its short-term payments so that it receives LIBOR + 2% and pays a fixed rate of 3%,what is the rate of interest on its borrowing?

• A)5%
• B)4%
• C)6%
• D)2%
• E)3%

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Definitions:

Performance Success

The degree to which an individual, team, or organization meets or exceeds set objectives or expectations.

Negative Performance Norms

Established patterns of behavior within a group that accept or encourage poor performance or dysfunctional activities.

Team Cohesiveness

Describes the extent to which team members are connected with each other and are motivated to achieve the group’s objectives collectively, enhancing performance and satisfaction.

Positive Performance Norms

Established standards or expectations within a group that encourage productive and beneficial behaviors among its members.