Use the interest rates below to identify where each firm has a comparative advantage and...
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Accounting
Use the interest rates below to identify where each firm has a comparative advantage and then design a swap based upon the comparative advantage that allows the financial institution to capture a fee and benefits both Firm A and Firm B equally. You do not need to draw the swap diagram.
Firm Fixed Floating
Firm A LIBOR
Firm B LIBOR
Provide your answers by typing in an answer with the appropriate letter for each item requested in the list below
a Which firm has the comparative advantage in Fixed
b Which firm has the comparative advantage in Floating
c In the Swap what rate is received by Firm A In the swap what rate is paid by Firm A
d In the Swap what rate is received by Firm B In the swap what rate is paid by Firm B
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