Fixed rate Floating rate
(%)
(%)
Company A
12.60
11.50
Company B
15.00
13.00
Determine the comparative advantage that
will be shared by both parties, should they
enter into a swap agreement with an
intermediary netting 0.20% per annum.
Assume that Company A requires a
floating rate loan and Company B a fixed
rate loan. Effective interest owed by
Company A and Company B, respectively.
Company B
Advantage Company A
Select one:
a. 0.90% 12.65% 12.25%
Ob. 3.90% 13.05% 10.65%
c. 3.90% 9.55% 11.05%
O d. 0.90% 11.15% 14.65%
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