# Answer to Question #11526 in Finance for Narxoznik

Question #11526

Assume that the following interest rates at which firms A and B can borrow:

Fixed rate Floating rate

Firm A 8% LIBOR + 1%

Firm B 9% LIBOR + 1.4%

Premium paid by B over A 1% 0.4%

Also assume that A ultimately wants a floating rate loan while B wants a fixed rate loan. Design an interest rate swap so that both can benefit, assuming that no swap bank is involved

Fixed rate Floating rate

Firm A 8% LIBOR + 1%

Firm B 9% LIBOR + 1.4%

Premium paid by B over A 1% 0.4%

Also assume that A ultimately wants a floating rate loan while B wants a fixed rate loan. Design an interest rate swap so that both can benefit, assuming that no swap bank is involved

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