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Z wishes to borrow at a floating rate and has been told that it can...

Z wishes to borrow at a floating rate and has been told that it can use swaps to reduce the effective interest rate it pays. Z can borrow floating at Libor ' 1, and fixed at 10%.

Which of the following companies would be the most appropriate for Z to enter into a swap with?

A.

Company A - it can borrow floating L +1 ½ and fixed at 9.5%

B.

Company D - it can borrow at L +1 ½ and fixed at 10.5%

C.

Company C - it can borrow at L +1 ½ and fixed at 9%

D.

Company E - it can borrow floating at L +1 ½ and fixed at 12%

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