Company A And B Have Been Offered The Following Rates Per Annum On A 20 Million Five 2459116

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

Fixed rate

Floating rate

Company A


LIBOR + 1%

Company B


LIBOR + 1.25%

Company A requires a floating-rate loan; company B requires a fixed-rate loan. Design a swap that will appear equally attractive to both companies.

Prof. Angela


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Price (USD)