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Interest Rates and Swap Agreements

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Questions and Answers

What is the Effective Cost of Borrowing for India Infotech in USDollar?

LIBOR + 0.6%

LIBOR + 2.5%

LIBOR + 0.3% (correct)

LIBOR + 1.0%

What is the cost of borrowing for Watson Inc. in INR?

9.2% (correct)

8.0%

10.0%

9.5%

What is the cash outflow for India Infotech in the currency swap?

8.0% (INR fixed)

LIBOR + 1.0% (USD floating)

9.2% (INR fixed) (correct)

LIBOR + 0.30% (USD floating)

What is the cash inflow for Western Inc. in the currency swap?

LIBOR + 1.0% (USD floating) Signup and view all the answers

What is the interest cost of the lender for India Infotech?

LIBOR + 0.30% Signup and view all the answers

What is the interest cost of the lender for Western Inc.?

LIBOR + 1.0% Signup and view all the answers

What is the role of the swap dealer in the currency swap?

Acts as an intermediary Signup and view all the answers

What is the currency of the loan for IBM Inc. in the given example?

US Dollar Signup and view all the answers

What is the type of interest rate for IBM Inc. in the given example?

Floating rate Signup and view all the answers

What is the type of interest rate for Suzuki Corporation in the given example?

Fixed rate Signup and view all the answers