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Business, 31.03.2020 01:35 troyjbabyjohnson

Assume that you have an outstanding 100M loan with your bank under which you pay 5% fixed rate. Assume also that you have entered into a swap agreement for a notional of 100M USD under which every 6 months you agree to pay LIBOR and receive 4% fixed. On the date you signed the contract LIBOR is 3%. The exchange of payments under the swap have the effect of modifying your liabilities so that a. you end up having a loan that costs LIBOR - 100 bps floating rate. b. you end up having a loan that costs LIBOR 100 bps floating rate. c. you end up having a loan that costs 4% fixed rate. d. you end up having a loan that costs 6% fixed rate.

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Assume that you have an outstanding 100M loan with your bank under which you pay 5% fixed rate. Assu...
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