Company A and B were offered the following rates per annum on a $20 million five-year loan. Company A requires a floating-rate loan: company B requires a fixed-rate loan. Which statement below is true? Company A Company B Fixed Rate 5.0% 6.4% Floating Rate LIBOR+0.1% LIBOR+0.6% O [A] Company A has an apparent comparative advantage in floating-rate market. O [8] Company B has an apparent comparative advantage in foxed-rate market. OIC Company A has an apparent comparative advantage in foxed-rate market.

Company A and B were offered the following rates per annum on a $20 million five-year loan. Company A requires a floating-rate loan: company B requires a fixed-rate loan. Which statement below is true? Company A Company B Fixed Rate 5.0% 6.4% Floating Rate LIBOR+0.1% LIBOR+0.6% O [A] Company A has an apparent comparative advantage in floating-rate market. O [8] Company B has an apparent comparative advantage in foxed-rate market. OIC Company A has an apparent comparative advantage in foxed-rate market.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter20: Short-term Financing

Section: Chapter Questions

Problem 11QA

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