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Calculate the quality spread differential

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Reference no: EM133039085

Question - Alpha and Beta Companies can borrow for a five-year term at the following rates:

 

Alpha

Beta

Moody's credit rating

Aa

Baa

Fixed-rate borrowing cost

10.4%

11.6%

Floating-rate borrowing cost

LIBOR

LIBOR + 1%

Required - Calculate the quality spread differential (QSD).

Reference no: EM133039085

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