Company a Can Issue Floating-Rate Debt at LIBOR + 1

question 4

Multiple Choice

Company A can issue floating-rate debt at LIBOR + 1% and can issue fixed rate debt at 9%. Company B can issue floating-rate debt at LIBOR + 1.5% and can issue fixed-rate debt at 9.4%. Suppose A issues floating-rate debt and B issues fixed-rate debt, after which they engage in the following swap: A will make a fixed 7.95% payment to B, and B will make a floating-rate payment equal to LIBOR to A. What are the resulting net payments of A and B?

• A) a pays a fixed rate of 9%, b pays libor + 1.5%.
• B) a pays a fixed rate of 8.95%, b pays libor + 1.45%.
• C) a pays libor plus 1%, b pays a fixed rate of 9.4%.
• D) a pays a fixed rate of 7.95%, b pays libor.
• E) none of the above answers is correct.

Understand the interaction between the endocrine system and the nervous system.

Recognize the effects of hormones on behavior and physiological processes.

Comprehend the role of the hypothalamus and pituitary gland in regulating endocrine functions.

Understand the methods and technologies used to study the brain's structure and function.

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