What is Snow Ltd loan rate

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Reference no: EM132934221

Problem - Two firms are looking to borrow funds from a commercial bank for 10 years. Snow Ltd has an exceptional credit rating and can borrow at the prime rate. On the other hand, due to some financial distress recently encountered during COVlD-19, Hound Ltd's credit rating is prime + 3. The current prime rate is 3.25%, the 30-year Treasury bond yield is 2.31%, 10-year Treasury bond yield is 1.61%, and the 3- month Treasury bill yield is 0.11%.

Required -

i. What is Snow Ltd's loan rate?

ii. What is Hound Ltd's loan rate?

Reference no: EM132934221

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