Counterparty A can borrow from the floating rate market at LIBOR + 0.5% and Counterparty B can borrow from the Eurobond market at 7%. If Counterparty A pays 7.35% into the swap and Counterparty B pays the LIBOR rate plus 0.5% into the swap, then the overall cost to borrow by Counterparty B is: а. 7.85% b. LIBOR + 0.5% С. 7% d. LIBOR + 7.5% е. 7.35%
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- (Following Rates are Quoted) Company A Company B Credit Rating A B Fixed Rate 6% 8% Floating Rate LIBOR+1% LIBOR+1.5% Which company has a relative advantage and in which market? Which company has an absolute advantage and in which market Company A wants to borrow floating. Company B wants to borrow fix. Build a proper SWAP that benefit the two companies.Company H is a high credit-worthy borrower. Company L is a low credit-worthy borrower. Their preference, status, and borrowing opportunities are shown below: Company Preferred Currently Floating Rate Borrowing Cost Fixed Rate Rate Borrowing at. Borrowing Cost H. Floating Fixed 4.25% PRIME Fixed Floating 6.25% PRIME + 0.50% Suppose the OSD is equally shared between H, L and the swap dealer. If the swap dealer receives PRIME from H, what should the swap dealer pay to H? O Prime- 0.75 % O Prime + 0.33% 4.25% 4.75%.Use the following information for the next two questions. Firms X and Y have the following borrowing costs: Company X Company Y Fixed-Rate Borrowing Costs Floating-Rate Borrowing Costs 9.5% 7.5% LIBOR +1.25% LIBOR A swap bank offer the following quote for an interest only swap: 7.1-7.6 (against LIBOR) 1) X wants a fixed loan. What would be their all in cost if instead of getting a fixed loan directly they initially get a floating loan and swap it using the above quote? a. 8.5% b. 8.85% C. 8.95% d. 8.65% e. None of the above
- A firm can issue one of the listed products and convert them into the floating rate using IR swaps (LIBOR for 3.7% fixed). What is the lowest floating rate that the firm can get? Fixed rate note: 4% Simple FRN: L+ 0.5% Inverse floater: 7.6% - L Question 6 options: L+ 0.1% L+ 0.2% L+ 0.3% L+ 0.5%A firm can issue one of the listed products and convert them into the floating rate using IR swaps (LIBOR for 3.7% fixed). What is the lowest floating rate that the firm can get? Fixed rate note: 4% Simple FRN: L + 0.5% Inverse floater: 7.6% - L (e.g., if we can pay only L + 0.1% that would be great, but can we obtain such a low rate?) a.) L + 0.1% b.) L + 0.2% c.) L + 0.3% d.) L + 0.5%Imagine that the table above outlines deposits rates. Assuming A wants a fixed rate deposit and B wants a floating rate deposit, design the swap that would split the net gain in proportion 3:1 between A and B (A=3 : B=1).
- Company A can borrow money at a fixed rate of 9 percent or a variable rate set at prime plus 1 percent. Company B can borrow money at a variable rate of prime plus 2 percent or a fixed rate of 8.25 percent. Company A prefers a fixed rate and company B prefers a variable rate. A swap dealer can bring them together for a commission of 1% on the swap deal. a) Compute the potential gain for the concerned parties through the swap deal? b) Show a swapping arrangement, ensuring that both Company A and B are better off and the swap dealer gets the 1% cut.Company A can borrow money at a fixed rate of 9 percent or a variable rate set at prime plus 1 percent. Company B can borrow money at a variable rate of prime plus 2 percent or a fixed rate of 8.25 percent. Company A prefers a fixed rate and company B prefers a variable rate. 1. Compute the potential gain for the concerned parties through the swap deal.Please do not copy and paste what has been already posted. Show full working. Company A can borrow money at a fixed rate of 9 percent or a variable rateset at prime plus 1 percent. Company B can borrow money at a variable rateof prime plus 2 percent or a fixed rate of 8.25 percent. Company A prefersa fixed rate and company B prefers a variable rate. A swap dealer can bringthem together for a commission of 1% on the swap deal.a) Compute the potential gain for the concerned parties through the swapdeal?b) Show a swapping arrangement, ensuring that both Company A and B arebetter off and the swap dealer gets the 1% cut.
- Please do not copy and paste what has been already posted. Show full working. Company A can borrow money at a fixed rate of 9 percent or a variable rateset at prime plus 1 percent. Company B can borrow money at a variable rateof prime plus 2 percent or a fixed rate of 8.25 percent. Company A prefersa fixed rate and company B prefers a variable rate. A swap dealer can bringthem together for a commission of 1% on the swap deal.b) Show a swapping arrangement, ensuring that both Company A and B arebetter off and the swap dealer gets the 1% cut.Company A can borrow money at a fixed rate of 9 percent or a variable rate set at prime plus 1 percent. Company B can borrow money at a variable rate of prime plus 2 percent or a fixed rate of 8.25 percent. Company A prefers a fixed rate and company B prefers a variable rate. A swap dealer can bring them together for a commission of 1% on the swap deal. 1. Show a swapping arrangement, ensuring that both Company A and B are better off and the swap dealer gets the 1% cut.9) Find the maximum value of no arbitrage forward bid price and the minimum value of no arbitrage forward ask price by using the following information. Interest rates: = 7% for borrowing 2% for borrowing ¡USD iJPY Exchange rates: Spot Forward BID 0.0110 USD/JPY Fb = ? 6% for lending 1% for lending ASK 0.0125 USD/JPY Fa = ?