What is the comparative advantage of company x

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Question 1: An investment bank is to advise two client companies on the establishment of a mutually beneficial swap facility. Both companies are able to access funding within the fixed interest rate debt markets and the floating interest rate debt markets. However, company X has a comparative advantage over company Y within one of the debt markets. Based on the following data, what is the comparative advantage of company X?

Company X: fixed rate 10.8% per annum; floating rate BBSW+ 0.3% per annum
Company Y: fixed rate 11.5% per annum; floating rate BBSW+1.7% per annum

Select one:

a. Fixed interest rate debt market, 0.7% per annum
b. Floating interest rate debt market, 1.4% per annum
c. Fixed interest rate debt market, 10.8% per annum
d. Floating interest rate debt market, BBSW + 0.3% per annum

Reference no: EM132861361

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