•Suppose that IBM would like to borrow fixed-rate yen, whereas Korea Development Bank (KDB) would like to borrow floating-rate dollars. IBM can borrow fixed-rate yen at 4.5 percent or floating-rate dollars at LIBOR +0.25 percent. KDB can borrow fixed-rate yen at 4.9 percent or floating-rate dollars at LIBOR +0.8 percent. . a. What is the range of possible cost savings that IBM can realize through an interest rate/currency swap with KDB?

•Suppose that IBM would like to borrow fixed-rate yen, whereas Korea Development Bank (KDB) would like to borrow floating-rate dollars. IBM can borrow fixed-rate yen at 4.5 percent or floating-rate dollars at LIBOR +0.25 percent. KDB can borrow fixed-rate yen at 4.9 percent or floating-rate dollars at LIBOR +0.8 percent. . a. What is the range of possible cost savings that IBM can realize through an interest rate/currency swap with KDB?

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter12: Managing Economic Exposure And Translation Exposure

Section: Chapter Questions

Problem 4BIC

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