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Business, 18.12.2019 02:31 pr4ever

Murray's can borrow money at a fixed rate of 10.5 percent or a variable rate set at prime plus 2.25
percent. fred's can borrow money at a variable rate of prime plus i .5 percent or a fixed rate of 12 percent.
murray's prefers a variable rate and fred's prefers a fixed rate. given this information, which one of the
following statements is correct?

a. after swapping interest rates with fred's, murray's may be able to pay prime plus 2 percent.
b. both companies can profit in a swap which will allow murray's to pay a variable rate of prime plus one percent.
c. fred's will end up with a fixed rate of 10 percent.
d. fred's has the best chance of profiting if it does an interest rate swap with murray's.
e. there are no terms under which murray's and fred's can swap interest rates.

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Answers: 1

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Murray's can borrow money at a fixed rate of 10.5 percent or a variable rate set at prime plus 2.25...
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