What Rate Would Company a Have to Pay on Its

question 23

Multiple Choice

What rate would company A have to pay on its floating rate debt so that an interest rate swap would no longer benefit each party?

• A)LIBOR 0.5
• B)LIBOR
• C)LIBOR + 0.5
• D)An interest swap is always beneficial for both parties involved

---

Definitions:

Comparative Advantage

The ability of a party to produce a particular good or service at a lower opportunity cost than another.

Technology

The application of scientific knowledge for practical purposes, especially in industry and improving human life.

Automobiles

Motor vehicles with four wheels designed to transport people on roads; their availability, culture, and economics significantly impact society.

Comparative Advantage

The ability of an entity to produce goods or services at a lower opportunity cost than others, leading to more efficient trade and production.