Business, 06.05.2021 23:30 genyjoannerubiera

The following table shows the market rates for Company A and B in the fixed rate market and the floating rate market. Company A Company B
Fixed 8.30% 9.20%
Floating LIBOR+20bp LIBOR+50bp

Suppose a financial intermediary makes the following proposal. Company A will borrow in the fixed rate market, and Company B will issue debt in the floating rate market. Then, Company A will pay LIBOR 20bp to the intermediary, which in turn will pay LIBOR 10bp to Company B. Company B will pay 8.7% fixed rate to the intermediary, and the intermediary will pay 8.6% to Company A. Which of the following statements is the least accurate?

a. Company B has a comparative advantage in floating rate borrowing.
b. Company A gains 0.3% from the swap.
c. The intermediary gains 0.2% from the swap.
d. Company A has an absolute advantage in fixed rate borrowing.
e. Company B gains 0.2% from the swap.

Answers: 1

Show answers

Another question on Business

Business, 21.06.2019 22:40

Which economic indicators are used to measure the global economy? check all that apply. a. purchasing power parity b. trade volumes c. spending power parity d. labor market data e. gross domestic product f. trade deficits and surpluses

Answers: 3

Answer

Business, 22.06.2019 07:40

Myflvs -question 3 multiple choice worth 2 points)(10.04 hc)in panama city in january, high tide was at midnight. the water level at high tide was 9 feet and1 foot at low tide. assuming the next high tide is exactly 12 hours later and that the height of thewater can be modeled by a cosine curve, find an equation for water level in january for panamacity as a function of time (t).of(t) = 4 + 5of(t) = 5 cost + 4o 460) = 5 cos 1+ 4of(0) = 4 cos + 5

Answers: 1

Answer

Business, 22.06.2019 19:40

Sue now has $125. how much would she have after 8 years if she leaves it invested at 8.5% with annual compounding? a. $205.83b. $216.67c. $228.07d. $240.08e. $252.08

Answers: 1

Answer

Business, 22.06.2019 21:00

Dozier company produced and sold 1,000 units during its first month of operations. it reported the following costs and expenses for the month: direct materials $ 69,000 direct labor $ 35,000 variable manufacturing overhead $ 15,000 fixed manufacturing overhead 28,000 total manufacturing overhead $ 43,000 variable selling expense $ 12,000 fixed selling expense 18,000 total selling expense $ 30,000 variable administrative expense $ 4,000 fixed administrative expense 25,000 total administrative expense $ 29,000 required: 1. with respect to cost classifications for preparing financial statements: a. what is the total product cost

Answers: 2

Answer

You know the right answer?

The following table shows the market rates for Company A and B in the fixed rate market and the floa...

Questions