What the rate each party will pay and receive from dealer

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Reference no: EM131341470

Explain how the following scenarios should be resolved: Murrays can borrow money at a fixed rate of 10.5 percent or a variable rate set at prime plus 2.25 percent. Fred’s can borrow money at a variable rate of prime plus 1.5 percent or a fixed rate of 12 percent. Murrays prefers a variable rate and Fred’s prefers a fixed rate. The swap dealer will take a 1.5 percent profit. Specify what the rate each party will pay and receive from the dealer and how each dealer will lock in their profit. please show work

Murray:

Pay

Receive

Savings

Fred:

Pay

Receive

Savings

Dealer:

Pay to Murray

Receive from Murray

Profit

Pay to Fred

Receive from Fred

Profit

Reference no: EM131341470

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