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7.21. (a) Company X has been offered the swap quotes in Table 7.3. It can invest for four years at
2.8%. What floating rate can it swap this fixed rate into? (b) Company Y has also been offered the
swap quotes in Table 7.3. It is confident that it will be able to invest at LIBOR minus 50 basis
points for the next ten years. What fixed rate can it swap this floating rate into?Table 7.3 Bid and
offer fixed rates in the swap market for a swap where payments are exchanged semiannually
(percent per annum)

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  • 1. 7.21. (a) Company X has been offered the swap quotes in Table 7.3. It can invest for four years at 2.8%. What floating rate can it swap this fixed rate into? (b) Company Y has also been offered the swap quotes in Table 7.3. It is confident that it will be able to invest at LIBOR minus 50 basis points for the next ten years. What fixed rate can it swap this floating rate into?Table 7.3 Bid and offer fixed rates in the swap market for a swap where payments are exchanged semiannually (percent per annum)