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Determining the floating rate market

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Reference no: EM133110010

Company A is interested in a floating rate loan, and company B is interested in a fixed loan. In the fixed rate market, company A and B may borrow at 10% and 11%, respectively. In the floating rate market, company A and B may borrow at LIBOR+0.1% and LIBOR+1.3%, respectively. Which statement is true?

Group of answer choices

  • None of the above
  • Company B may borrow at 10.9% if it enters a swap agreement with company A
  • Company A and B are not interested in a interest swap agreement
  • Company A may borrow at LIBOR-0.1% if it enters a swap agreement with company B
  • Company B may borrow at 9.6% if it enters a swap agreement with company A
  • Company A may borrow at LIBOR if it enters a swap agreement with company B

Reference no: EM133110010

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