-If Company a and Company B Share the Interest Savings

question 7

Multiple Choice

$\begin{array}{lll}&\text { Fixed-Rate } & \text { Floating-Rate } \\&\text { Borrowing Cost } & \text { Borrowing Cost }\\\text { Company: A} & 6 \% & \text { LIBOR } \\\text { Company: B} & 5 \% & \text { LIBOR }-0.5\end{array}$
-If company A and company B share the interest savings from the interest rate swap equally,company A will pay after the swap on its preferred debt:

• A) 5.5%.
• B) 5.75%.
• C) LIBOR - 0.75%.
• D) LIBOR.

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Definitions:

Performance Measures

Key indicators used to evaluate the efficiency, effectiveness, and performance of an organization or individual.

Nonfinancial Measures

Performance indicators that are not expressed in monetary units but are qualitative or quantitative measures of a company's performance, such as customer satisfaction.

Investment Center

A business unit or segment within a larger corporation, with control over its investments, expenses, and revenues, often judged by its return on investment.

Profit Margin

Profit margin represents the percentage of revenue that remains as profit after all expenses have been deducted, highlighting the financial health and profitability of a business.