The cost to IBM and KDB of accessing either the fixed rate yen or the floating rate dollar market for a new debt issue is as follows:Suppose that IBM would like to borrow fixed rate yen, whereas KDB would like to borrow floating rate dollars.
Identify the overall spread (basis point) of the swap and at what rate should each party borrow to create the swap?IMB has competitive advantage in which rate?
What is the fixe rate Yen at which IBM can borrow through interest rate/currency swap if KBD can borrow at floating rate of libor+0.25?
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