BDP
05-05-2005, 01:42 AM
Can someone help me with this problem:
8. Swaps, I. Miss Molly.com and MaxFu Enterprises have been offered the following rates per annum on a $20,000,000 5-year loan:
Fixed Rate Floating Rate
Miss Molly.com 7.0% LIBOR + 0.1%
MaxFu Enterprises 9.9% LIBOR + 2.7%
Miss Molly.com requires a floating rate loan. MaxFu Enterprises requires a fixed-rate loan. Design an interest rate swap that benefits Miss Molly.com twice as much as it does MaxFu Enterprises.
8. Swaps, I. Miss Molly.com and MaxFu Enterprises have been offered the following rates per annum on a $20,000,000 5-year loan:
Fixed Rate Floating Rate
Miss Molly.com 7.0% LIBOR + 0.1%
MaxFu Enterprises 9.9% LIBOR + 2.7%
Miss Molly.com requires a floating rate loan. MaxFu Enterprises requires a fixed-rate loan. Design an interest rate swap that benefits Miss Molly.com twice as much as it does MaxFu Enterprises.