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1. As a swap broker, you are in touch with two firms, Firm A and B. The borrowing cost is 7.50% per year for Firm A and
Posted: Sun May 29, 2022 6:01 pm
by answerhappygod
- 1 As A Swap Broker You Are In Touch With Two Firms Firm A And B The Borrowing Cost Is 7 50 Per Year For Firm A And 1 (15.65 KiB) Viewed 13 times
1. As a swap broker, you are in touch with two firms, Firm A and B. The borrowing cost is 7.50% per year for Firm A and 6.00% per year for Firm B in the fixed rate market and LIBOR+2.00% for Firm A and LIBOR+1.50% for Firm B in the floating-rate market. If Firm A wants to borrow in the fixed rate market and Firm B wants to borrow in the floating rate market, illustrate how you can set up an interest rate swap that would look equally attractive to both firms and leave a 0.2% margin to your brokerage
company.