Yen rate leg and dollar rate leg in the swap

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Reference no: EM131300216

Company A can borrow yen at 16.0 percent and dollars at 14.6 percent. Company B can borrow yen at 14.6 percent and dollars at 14.133 percent. If A would like to borrow yen and B would like to borrow dollars. The financial intermediary charges a fee of 0.14. The gain is evenly split between the two parties and exchange rate risk assumed by the intermediary. Design a swap. What is company A's yen rate leg and B's dollar rate leg in the swap?

a. A: receive 14.203 percent yen, B: receive 14.203 percent dollars

b. A: pay 14.063 percent yen, B: pay 14.063 percent dollars

c. A: receive 15.463 percent yen, B: receive 13.597 percent dollars

d. A: pay 15.603 percent yen, B: pay 13.737 percent dollars

Reference no: EM131300216

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