the following table The rates at which they can get the required funds in their respective markets are shown in floating rate funds, and Aramco needs US dollar fixed rate funds. HSBC recently arranged a swap between Oman Oil and Aramco. Oman oil needs US dollar Oman Oil Aramco Floating Rate Funds LIBOR + 4% LIBOR +1% Fixed Rate Funds 11% 10% HSBC arranged a swap such that both the Oman Oil and Aramco benefited from the swap. Three possible answers are shown below. Which one is probably the correct one. funds to Aramco at 10% A. Aramco gives floating rate funds to Oman Oil at LIBOR+2%, and Oman Oil gives B. Aramco gives floating rate funds to Oman Oil at LIBOR+3%, and Oman Oil gives funds to Aramco at 10% C. Aramco gives floating rate funds to Oman Oil at LIBOR+4%, and Oman Oil gives funds to Aramco at 9% Draw a diagram showing how the SWAP works
the following table The rates at which they can get the required funds in their respective markets are shown in floating rate funds, and Aramco needs US dollar fixed rate funds. HSBC recently arranged a swap between Oman Oil and Aramco. Oman oil needs US dollar Oman Oil Aramco Floating Rate Funds LIBOR + 4% LIBOR +1% Fixed Rate Funds 11% 10% HSBC arranged a swap such that both the Oman Oil and Aramco benefited from the swap. Three possible answers are shown below. Which one is probably the correct one. funds to Aramco at 10% A. Aramco gives floating rate funds to Oman Oil at LIBOR+2%, and Oman Oil gives B. Aramco gives floating rate funds to Oman Oil at LIBOR+3%, and Oman Oil gives funds to Aramco at 10% C. Aramco gives floating rate funds to Oman Oil at LIBOR+4%, and Oman Oil gives funds to Aramco at 9% Draw a diagram showing how the SWAP works
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:the following table
The rates at which they can get the required funds in their respective markets are shown in
floating rate funds, and Aramco needs US dollar fixed rate funds.
HSBC recently arranged a swap between Oman Oil and Aramco. Oman oil needs US dollar
Oman Oil
Aramco
Floating Rate Funds
LIBOR + 4%
LIBOR +1%
Fixed Rate Funds
11%
10%
HSBC arranged a swap such that both the Oman Oil and Aramco benefited from the swap.
Three possible answers are shown below. Which one is probably the correct one.
funds to Aramco at 10%
A. Aramco gives floating rate funds to Oman Oil at LIBOR+2%, and Oman Oil gives
B. Aramco gives floating rate funds to Oman Oil at LIBOR+3%, and Oman Oil gives
funds to Aramco at 10%
C. Aramco gives floating rate funds to Oman Oil at LIBOR+4%, and Oman Oil gives
funds to Aramco at 9%
Draw a diagram showing how the SWAP works
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