You are currently borrowing $100,000,000 based upon a floating rate of LIBOR + 1%.You would like to borrow the same amount with a fixed rate of 7%.Which interest rate swap will achieve that end?

Question

Quizplus · Accepted Answer

-7% = -(LIBOR + 1%)+ (LIBOR + Spread)- Fixed
-7% = -1% + Spread - Fixed
6% = Spread - Fixed ====> any choice where the spread to LIBOR - the Fixed rate is 6%

You Are Currently Borrowing $100,000,000 Based Upon a Floating Rate