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-If Company a and Company B Share the Interest Savings

Question 1

Multiple Choice

 Fixed-Rate  Floating-Rate  Borrowing Cost  Borrowing Cost  Company: A6% LIBOR  Company: B5% LIBOR 0.5\begin{array}{lll}&\text { Fixed-Rate } & \text { Floating-Rate } \\&\text { Borrowing Cost } & \text { Borrowing Cost }\\\text { Company: A} & 6 \% & \text { LIBOR } \\\text { Company: B} & 5 \% & \text { LIBOR }-0.5\end{array}
-If company A and company B share the interest savings from the interest rate swap equally,company A will pay after the swap on its preferred debt:


A) 5.5%.
B) 5.75%.
C) LIBOR - 0.75%.
D) LIBOR.

Correct Answer:

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