A company based in the USA has a substantial fixed rate borrowing at an interest...

CIMA F3 Question Answer

A company based in the USA has a substantial fixed rate borrowing at an interest rate of 3.5% and wishes to swap a part of this to a floating rate to take advantage of reducing interest rates Its bank has quoted swap rates of 3 4%-3 5% against 12-month USD risk-free rate.

What is the overall interest rate achieved by the company under this borrowing plus swap combination?

12-month USD risk-free rate minus 0 1 % (where 0 1 % = the fixed rate of 3.6% minus the swap rate of 3 4%)

12-month USD risk-free rate

12-month USD risk-free rate plus 0 1% (where 0.1 % = the fixed rate of 3.5% minus the swap rate of 3 4%) D. Unchanged at 3.60% as this is the same as the swap rate

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Vendor: CIMA
Product: F3
Update on: Jul 29, 2025
Questions: 435

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A company based in the USA has a substantial fixed rate borrowing at an interest...

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