Using the data below,calculate the fixed interest rate payable by company B in the swap transaction.
A) 11.075% per annum
B) 11.275% per annum
C) 11.325% per annum
D) 11.550% per annum

Question

Using the data below,calculate the fixed interest rate payable by company B in the swap transaction. 
A) 11.075% per annum 
B) 11.275% per annum 
C) 11.325% per annum 
D) 11.550% per annum

Quizplus · Accepted Answer

In a swap transaction, Company A will pay a fixed interest rate of 11.425% per annum and receive a floating interest rate of 3-month LIBOR. Company B will pay a floating interest rate of 3-month LIBOR and receive a fixed interest rate. The spread in the interest rates is 0.10%, which means that Company B will receive a fixed interest rate of 11.325% per annum (11.425% - 0.10%). Therefore, the correct answer is C).

Using the Data Below,calculate the Fixed Interest Rate Payable by Company