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Question: A company has a variable-rate loan with a bank paying LIBOR plus 65. The company wishes to create a synthetic fixed-rate loan and enters into an interest rate swap paying a swap fixed rate of 9 percent and receives LIBOR. The company also pays an annual swap spread of 35 basis points to the swap dealer. Calculate the effective fixed rate on the synthetic fixed-rate loan.

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The expert solves interest rate swaps.

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Also, refer to the attachment file.

The company receives: LIBOR - from the swap dealer

The company ...

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