INVESTMENTS-CONNECT PLUS ACCESS
11th Edition
ISBN: 2810022611546
Author: Bodie
Publisher: MCG
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Chapter 23, Problem 22PS
Summary Introduction
Adequate information:
D trading issue bond $100M@7%
D trading enter in swap with another firm
D trading pay LIBOR and receive fixed interest 6% on same amount
To compute: Effective interest rate on the borrowing.
Introduction: Interest rate swap is exchange of interest between two party to reduce their interest burden. There must be one party with floating interest rate and another party with fixed interest rate.
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Chapter 23 Solutions
INVESTMENTS-CONNECT PLUS ACCESS
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