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

question 69

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 proposes the following interest only swap: Y will pay the swap bank annual payments on $10,000,000 with a fixed rate of rate of 9.90%.in exchange the swap bank will pay to company Y interest payments on $10,000,000 at LIBOR - 0.15%; What is the value of this swap to company Y?

• A)Company Y will save 15 basis points per year on $10,000,000 = $15,000 per year.
• B)Company Y will save 45 basis points per year on $10,000,000 = $45,000 per year.
• C)Company Y will save 5 basis points per year on $10,000,000 = $5,000 per year.
• D)Company Y will only break even on the deal.

---

Definitions:

Femininity

represents a set of attributes, behaviors, and roles generally associated with girls and women, often constructed socially and culturally.

Social Position

The rank or status of an individual or group within the social hierarchy.

Nursing

A profession in healthcare focused on the care of individuals, families, and communities to maintain or recover optimal health and quality of life.

Immunizations

The process by which an individual is made immune or resistant to an infectious disease, typically by the administration of a vaccine.