Multiple Choice
A firm can borrow at a fixed rate of 6.5% on long-term loans.If it swaps its long-term payments so that it receives 4% and pays a floating rate of LIBOR,what is the rate of interest on its borrowing?
A) LIBOR + 2.5%
B) LIBOR
C) LIBOR + 6.5%
D) LIBOR - 2.5%
E) LIBOR - 4%
Correct Answer:
Verified
Correct Answer:
Verified
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