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Business, 11.05.2021 19:50 pippalotta

Consider the borrowing rates for Parties A and B. A wants to finance a $100,000,000 project at a fixed rate. B wants to finance a $100,000,000 project at a floating rate. Both firms want the same maturity, 5 years. Firm Fixed Rate Floating A $ 10.3 % Prime + 1% B $ 8.9 % Prime + 1/2% Construct a mutually beneficial interest only swap that makes money for A, B, and the swap bank in equal measure. Assume that Party B pays prime rate to swap bank while the swap bank pays prime rate to party A. In that situation, what rate should the swap bank pay to Party B. A) 9% B) 8.7% C) 8.9% D) Prime + 1% E) None of the above

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Consider the borrowing rates for Parties A and B. A wants to finance a $100,000,000 project at a fix...
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