Company X Wants to Borrow $10,000,000 Floating for 5 Years;

question 41

Multiple Choice

Company X wants to borrow $10,000,000 floating for 5 years; company Y wants to borrow $10,000,000 fixed for 5 years.Their external borrowing opportunities are shown below: A swap bank is involved and quotes the following rates five-year dollar interest rate swaps at 10.05%-10.45% against LIBOR flat. Assume both X and Y agree to the swap bank's terms.
Fill in the values for A,B,C,D,E,& F on the diagram.

• A)A = LIBOR; B = 10.45%; C =10.05%; D = LIBOR; E = LIBOR; F = 12%
• B)A = 10%; B = 10.45%; C =10.05%; D = LIBOR; E = LIBOR; F = LIBOR + 1½%
• C)A = 10%; B = 10.45%; C = LIBOR; D = LIBOR; E = 10.05%; F = LIBOR + 1½%
• D)A = 10%; B = LIBOR; C = LIBOR; D = 10.45%; E = 10.05%; F = LIBOR + 1½%

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Definitions:

Genetic Variability

The diversity within and among populations in terms of genetics, which contributes to species' adaptability and evolution.

Captive Breeding

The process of breeding animals in controlled environments within human care, often used for conservation and research purposes.

Critical Habitats

Areas identified as essential for the conservation of endangered or threatened species, requiring special management and protection.

COSEWIC

The Committee on the Status of Endangered Wildlife in Canada, a group that assesses and classifies the conservation status of wildlife species at risk of extinction.