Make the swap equally attractive

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Company X wishes to borrow US dollar at fixed interest rate, Company Y wishes to borrow Rs. At a fixed rate of interest. The amounts required by the two companies are roughly the same at current exchange rate. The companies have been quoted the following interest rates, which have been adjusted for the impact of taxes. iNR Dollars Company X 9.6% 6.0% Company Y 11.1% 6.4% Design a swap that will net a bank acting as intermediary, 50 basis point per annum. Make the swap equally attractive to the two companies and ensure that all foreign exchange risk is assumed by the bank.

Reference no: EM133069477

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