Explore BrainMass
Share

International Finance

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

2. Square Corp. has not tapped the Swiss-franc public debt market because of concern about a likely appreciation of that currency and only wishes to be a floating-rate dollar borrower, which it can be at LIBOR + 3/8%. Circle Corp. has a strong preference for fixed-rate Swiss-franc debt, but it must pay 1/2 of 1% more than the 5 1/4% coupon that Square Corp.'s notes would carry. Circle Corp., however, can obtain Eurodollars at LIBOR flat (a zero margin). What is the range of possible cost savings to Square from engaging in a currency swap with Circle?

© BrainMass Inc. brainmass.com October 24, 2018, 10:55 pm ad1c9bdddf
https://brainmass.com/business/international-finance/international-finance-175159

Solution Preview

ANSWER. Square Corp. can borrow fixed-rate Swiss francs at 5.25% and floating-rate dollars at LIBOR + 3/8%. Meanwhile Circle Corp. can borrow fixed-rate Swiss francs at 5.75% and floating-rate dollars at LIBOR flat. The logical set of transactions ...

Solution Summary

This posting provides a detailed solution to the student's question.

$2.19
See Also This Related BrainMass Solution

International Financial Organizations

Evaluate the roles of international financial organizations and explain their impact on international trade and investments in regards to the stages of economic development.

View Full Posting Details