Multiple Choice
Your firm can borrow fixed at 8% and floating at Libor+1%. You can also enter into a fixed-for-Libor swap where the fixed rate is 7.5% (and the swap has the same maturity as the borrowing) . What is the cheapest way for the firm to obtain fixed rate financing?
A) Borrow at the fixed rate.
B) Borrow at the fixed rate and then swap into floating rate using the swap.
C) Borrow floating rate and then swap into fixed rate using the swap.
D) Both (a) and (b) .
Correct Answer:
Verified
Correct Answer:
Verified
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