You are a company and just issued a $20m 3-year fixed rate bond.Your investment bank suggests that you enter into an interest rateswap to turn this into a floating rate bond. Briefly discuss:
- Whether the swap should be one where your company pays fixedand receives floating or the other way around.
- Why your company might choose to enter the swap.
- Why your company chose to issue a fixed rate bond rather than afloating rate bond.
- Another choice that your company could take rather than usingthe interest rate swap
You should answer this question in a few short paragraphs.
