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SashulF [63]
3 years ago
10

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.
Fim Fixed Rate Floating
A $10.3% Prime + 1%
B $8.900 Prime +4%
Construct a mutually beneficial INTEREST ONLY swap that makes money for A, B, and the swap bank IN EQUAL MEASURE.

Business
1 answer:
QveST [7]3 years ago
4 0

Answer:

party A will pay floating rate while party B will pay fixed rate

Explanation:

For A

Sources at floating rate = prime 1%

received fixed rate = 8.9%

For B

sources fixed rate = 8.9%

Received floating rate = prime 1%

For a mutually beneficial interest only swap that makes money for A,Band the swap bank in equal measure, the party A will pay floating rate while party B will pay fixed rate

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A order comes in for two bean burritos and one crunchy taco the starter starts grilling the
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An order comes in for two bean burritos and one crunchy taco the starter starts grilling the tortilla. Assembling is the best move. This is further explained below.

<h3>What is Assembling?</h3>

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Read more about Assembling

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Paladinen [302]

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<h3>Required:</h3>

1. (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has thebetter return on assets?

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