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  3. firm x can borrow at the floating rate of libor+0.

Firm X can borrow at the floating rate of LIBOR+0.5% p.a. or at the fixed...

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Question

Finance

Firm X can borrow at the floating rate of LIBOR+0.5% p.a. or at the fixed rate of 4.0% p.a. Firm Y can borrow at LIBOR+1.0% p.a. floating or at 5.25% p.a. fixed. The quality spread differential is:

Select one:

a.

0.5% p.a.

b.

0.75% p.a.

c.

1.25% p.a.

d.

1.75% p.a.

e.

none of the above.

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