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Business, 30.03.2020 21:04 viridianasar5158

Suppose that Thales would like to borrow fixed-rate yen, whereas Korea Development Bank would like to borrow floating rate US dollars. Thales can borrow fixed-rate at 4.9% or floating $ at LIBOR + 0.25%. KDB can borrow fixed rate 4.5% for the ¥ and LIBOR +0.8% for the $. a) What are the possible cost savings that Thales can realize through an interest rate/currency swap with KDB? b) Assuming a notional principal of $125 million, and spot rate ¥105/$, what do the possible cost savings translate into in Japanese yen terms?

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