Company A can borrow at either an 8.5% fixed rate or a floating rate of prime + 1.75% Company B can borrow at either a floating rate of prime + 1.25% or a fixed rate of 8.65% Company A prefers a floating rate and Company B prefers a fixed rate. Which one of the following terms would be acceptable to both Company A and B if they opted to enter an interest rate swap?
A) 8.5% fixed for prime + 1.75% floating
B) 8.6% fixed for prime + 1.2% floating
C) 8.6% fixed for prime + 1.3% floating
D) 8.65% fixed for prime + 1.3% floating
E) 8.65% fixed for prime + 1.25% floating

Question

Quizplus · Accepted Answer

The Answer of Company A can borrow at either an 8.5% fixed rate or a floating rate of prime + 1.75% Company B can borrow at either a floating rate of prime + 1.25% or a fixed rate of 8.65% Company A prefers a floating rate and Company B prefers a fixed rate. Which one of the following terms would be acceptable to both Company A and B if they opted to enter an interest rate swap?
A) 8.5% fixed for prime + 1.75% floating
B) 8.6% fixed for prime + 1.2% floating
C) 8.6% fixed for prime + 1.3% floating
D) 8.65% fixed for prime + 1.3% floating
E) 8.65% fixed for prime + 1.25% floating

Company a Can Borrow at Either an 8