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ABC Company and XYZ Company need to raise funds to pay for capital improvements at...

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Finance

  1. ABC Company and XYZ Company need to raise funds to pay for capital improvements at their manufacturing plants. ABC Company can borrow funds either at 12 per cent fixed rate or at EURIBOR + 1.5 per cent floating rate. XYZ Company can borrow funds either at 8 per cent fixed rate or at EURIBOR + 2.75 per cent floating rate. Describe how you could bring these two companies together in an interest rate swap that would make both firms better off while netting your bank a profit.

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