ompanies A and B have been offered the following rates per annum on a $20 million...

ompanies A and B have been offered the following rates per annum on a $20 million five year loan.

	Fixed Rate	Floating Rate
A	4.2%	LIBOR+0.4%
B	5.4%	LIBOR+0.9%

You want to design a SWAP that will net a financial intermediary, that is swap dealer, 0.1% per annum and that will appear equally attractive to both companies.

How much each company may benefit from this SWAP if they split potential gains equally?

Expert Solution

jeff jeffy answered 1 year ago

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