Company X wants to borrow $10,000,000 floating for 5 years; company Y wants to borrow $10,000,000 fixed for 5 years. Their external borrowing opportunities are shown below: A swap bank is involved and quotes the following rates five-year dollar interest rate swaps at 10.05%-10.45% against LIBOR flat. Assume company Y has agreed, but company X will only agree to the swap if the bank offers better terms.
What are the absolute best terms the bank can offer X, given that it already booked Y?
A)10.45%-10.45% against LIBOR flat.
B)10.45%-10.05% against LIBOR flat.
C)10.50%-10.50% against LIBOR flat.
D)none of the above.

Question

Company X wants to borrow $10,000,000 floating for 5 years; company Y wants to borrow $10,000,000 fixed for 5 years. Their external borrowing opportunities are shown below:  A swap bank is involved and quotes the following rates five-year dollar interest rate swaps at 10.05%-10.45% against LIBOR flat. Assume company Y has agreed, but company X will only agree to the swap if the bank offers better terms.
What are the absolute best terms the bank can offer X, given that it already booked Y? 
A)10.45%-10.45% against LIBOR flat. 
B)10.45%-10.05% against LIBOR flat. 
C)10.50%-10.50% against LIBOR flat. 
D)none of the above.

Quizplus · Accepted Answer

The Answer of Company X wants to borrow $10,000,000 floating for 5 years; company Y wants to borrow $10,000,000 fixed for 5 years. Their external borrowing opportunities are shown below:  A swap bank is involved and quotes the following rates five-year dollar interest rate swaps at 10.05%-10.45% against LIBOR flat. Assume company Y has agreed, but company X will only agree to the swap if the bank offers better terms.
What are the absolute best terms the bank can offer X, given that it already booked Y? 
A)10.45%-10.45% against LIBOR flat. 
B)10.45%-10.05% against LIBOR flat. 
C)10.50%-10.50% against LIBOR flat. 
D)none of the above.

Company X Wants to Borrow $10,000,000 Floating for 5 Years;