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Posted: **Sun May 08, 2022 10:36 am**

: The Table Below Presents The Costs Of Borrowing For Caterpillar And Amazon In Dollars And Yens And The Quotes For Inter 1 (21.05 KiB) Viewed 24 times

: The Table Below Presents The Costs Of Borrowing For Caterpillar And Amazon In Dollars And Yens And The Quotes For Inter 2 (24.56 KiB) Viewed 24 times

: The Table Below Presents The Costs Of Borrowing For Caterpillar And Amazon In Dollars And Yens And The Quotes For Inter 3 (18.46 KiB) Viewed 24 times

The table below presents the costs of borrowing for Caterpillar and Amazon in Dollars and Yens, and the quotes for interest swaps in Dollars and Yens, both quoted against LIBOR. Caterpillar would like to get a fixed rate Yen loan. Amazon would like to get a fixed rate Dollar loan. How much can Amazon save by entering a currency swap agreement? Borrowing Cost in Borrowing Cost Borrowing Cost Yen in Dollars in Yen Caterpillar $11.00% 19.50% Amazon $11.60% 19.00% Swap Bank Quote
Borrowing Cost in Yen Caterpillar Borrowing Cost Borrowing Cost in Dollars in Yen $11.0096 9.50% Amazon $11.60% 49.00% Swap Bank Quote USD JPY Bid Ask Bid Ask $11.00% $11.30% 9.00% 19.17% $60 bps
Bid Ask Bid Ask $11.00% $11.30% 19.00% ¥9.17% $60 bps None of the alternatives $30 bps *50 bps O *33 bps