2. Company X, a British company, wishes to borrow U.S. dollars at a fixed rate o
ID: 2698344 • Letter: 2
Question
2. Company X, a British company, wishes to borrow U.S. dollars at a fixed rate of interest. Company Y, a U.S. company wishes to borrow British Pound at a fixed rate of interest. They have been offered the following rates; British pound (BP) U.s. Dollars Company X 11.0% 7.2% Company Y 10.6% 6.2% Which one the following swaps will net a bank 10 basis points per annum and will provide equal gains per annum for each of the two companies? Answer Let X pay 11.0% BP to outside, pay 5.55% $ to bank and let Y pay 6.2% on $ to outside and pay 9.95% on BP to the bank. Let X pay 11.0% BP to outside, pay 6.95% $ to bank and let Y pay 6.2% on $ to outside and pay 10.35% on BP to the bank. Let X pay 11.0% BP to outside, pay 7.55% $ to bank and let Y pay 6.2% on $ to outside and pay 10.95% on BP to the bank. all of the above. 2. Company X, a British company, wishes to borrow U.S. dollars at a fixed rate of interest. Company Y, a U.S. company wishes to borrow British Pound at a fixed rate of interest. They have been offered the following rates; British pound (BP) U.s. Dollars Company X 11.0% 7.2% Company Y 10.6% 6.2% Which one the following swaps will net a bank 10 basis points per annum and will provide equal gains per annum for each of the two companies? Let X pay 11.0% BP to outside, pay 5.55% $ to bank and let Y pay 6.2% on $ to outside and pay 9.95% on BP to the bank. Let X pay 11.0% BP to outside, pay 6.95% $ to bank and let Y pay 6.2% on $ to outside and pay 10.35% on BP to the bank. Let X pay 11.0% BP to outside, pay 7.55% $ to bank and let Y pay 6.2% on $ to outside and pay 10.95% on BP to the bank. all of the above. British pound (BP) U.s. Dollars Company X 11.0% 7.2% Company Y 10.6% 6.2%Explanation / Answer
Let X pay 11.0% BP to outside, pay 6.95% $ to bank and let Y pay 6.2% on $ to outside and pay 10.35% on BP to the bank.
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