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

question 84

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 here: $$\begin{array} { c c c } & \text { Fixed-Rate } & \text { Floating-Rate } \\&\text { Borrowing Cost } & \text { Bortowing Cost } \\\text { Compary X } & 10 \% & \text { LIBOR } \\\text { Compary Y } & 12 \% & \text { LIBOR } + 1.5 \%\end{array}$$ Design a mutually beneficial interest only swap for X and Y with a notational principal of $10 million by having appropriate values for;
A = Company X's external borrowing rate
B = Company Y's payment to X (rate) C = Company X's payment to Y (rate) D = Company Y's external borrowing rate
A.A = 10%; B = 11.75%; C = LIBOR - .25%; D = LIBOR + 1.5%
B.A = 10%; B = 10%; C = LIBOR - .25%; D = LIBOR + 1.5%
C.A = LIBOR; B = 10%; C = LIBOR - .25%; D = 12%
D.A = LIBOR; B = LIBOR; C = LIBOR - .25%; D = 12%

• A)Option a
• B)Option b
• C)Option c
• D)Option d

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Established methods and protocols for handling tasks and operations within an office environment to ensure efficiency and consistency.

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