Ask Question
6 February, 01:45

Murray's can borrow money at a fixed rate of 10.5 percent or a variable rate set at prime plus 2.25

percent. Fred's can borrow money at a variable rate of prime plus I. 5 percent or a fixed rate of 12 percent.

Murray's prefers a variable rate and Fred's prefers a fixed rate. Given this information, which one of the

following statements is correct?

A. After swapping interest rates with Fred's, Murray's may be able to pay prime plus 2 percent.

B. Both companies can profit in a swap which will allow Murray's to pay a variable rate of prime plus one percent.

C. Fred's will end up with a fixed rate of 10 percent.

D. Fred's has the best chance of profiting if it does an interest rate swap with Murray's.

E. There are no terms under which Murray's and Fred's can swap interest rates.

+2
Answers (1)
  1. 6 February, 01:50
    0
    D. Fred's has the best chance of profiting if it does an interest rate swap with Murray's.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Murray's can borrow money at a fixed rate of 10.5 percent or a variable rate set at prime plus 2.25 percent. Fred's can borrow money at a ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers