Use the Following Information to Calculate the Quality Spread Differential

question 35

Multiple Choice

Use the following information to calculate the quality spread differential (QSD) .

$$\begin{array} { c c c } & \text { Fixed-Rate Borrowirg } & \text { Floating-Rate BorTownre } \\&\text { Cost } & \text { Cost } \\\text { Compary X } & 10 \% & \text { LIBOR } \\\text { Compary Y } & 12 \% & \text { LIBOR } + 1.5 \%\end{array}$$

• A)0.50 percent
• B)1.00 percent
• C)1.50 percent
• D)2.00 percent

---

Definitions:

Food

Nutrient-rich substances consumed by organisms to provide energy and maintain life.

Utility Possibilities Frontier

A graphical representation showing all the possible combinations of two goods that two countries (or agents) can efficiently produce using all of their resources.

Marginal Rates

The amount of change in a variable (often related to costs or taxes) associated with a one-unit change in another variable.

Utility Functions

Mathematical representations describing the level of satisfaction or utility that a consumer derives from consuming a good or combination of goods.