Chapter 9 8e SM

May 25, 2014 · What is your effective borrowing rate? Borrow $100m short term and paying LIBOR + 1.0%. Then. enter a $100m notional swap to . receive LIBOR and pay 8.0% fixed. Effective borrowing rate is: (LIBOR + 1.0%) – LI. BOR + 8.0% = 9.0%. b. Suppose the firm’s credit rating does improve 3 years later. It can now borrow at a spread of 0.50% over ... ................
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