Black Corporation, a Large Australian Company, Can Borrow Funds at the BBSW+60bps

question 31

Essay

Black Corporation, a large Australian company, can borrow funds at the BBSW+60bps in the money market or at 8% fixed in the corporate bond market.It prefers a fixed rate exposure.Blue Bank can borrow at the BBSW by issuing CDs or at 6.8% fixed and prefers a floating rate exposure.Explain how a swap can be arranged to the advantage of both parties assuming savings are evenly shared.

---

Definitions:

Gestalt Psychologists

Psychologists who focus on human perception and cognitive processes, emphasizing the idea that the whole of anything is greater than its parts.

Behavioral

Pertaining to the actions or reactions of a person or animal in response to external or internal stimuli.

Humanistic

A psychological approach that emphasizes individual potential for growth and the importance of human values, freedom, and self-actualization.

Structuralistic

An approach in psychology that analyzes mental structures by breaking down experiences into their smallest definable parts.