Answer Happy

a The table below presents the costs of borrowing for Verizon and Caterpillar, and the a Swap Bank quote against LIBOR. Verizon would like to get a $4,000,000.00 floating rate loan. Caterpillar would like to get a $4,000,000.00 fixed rate loan. How much can the swap bank profit from entering into a swap agreement with Verizon and another with Caterpillar? Fixed-Rate Borrowing Cost Floating-Rate Borrowing Cost Verizon 7.00 Libor Caterpillar 11.50 Libor+4.40 Swap Bank Quote Bid Ask
Fixed-Rate Borrowing Cost Floating Rate Borrowing Cost Verizon 7.00 Libor Caterpillar 11.50 Libor+4.40 Swap Bank Quote Bid Ask 17.05% 7.08% $800 $3,200 $2,000 None of the alternatives $1,200