CIMA Financial Strategy F3 Question # 49 Topic 5 Discussion

CIMA Financial Strategy F3 Question # 49 Topic 5 Discussion

F3 Exam Topic 5 Question 49 Discussion:
Question #: 49
Topic #: 5

ZZZ wishes to borrow at a floating rate and has been told that it can use swaps to reduce the effective interest rate it pays. ZZZ can borrow floating at the risk-free rate + 1, and fixed at 10%.

Which of the following companies would be the most appropriate for ZZZ to enter into a swap with?


A.

Company DDA - it can borrow at risk-free rate + 1 Vz and fixed at 10.5%


B.

Company CCA - it can borrow at risk-free rate + Y% and fixed at 9%


C.

Company BBA - it can borrow floating at risk-free rate +VA and fixed at 12%


D.

Company AAB - it can borrow floating at risk-free rate + % and fixed at 9.5%


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