bodhisattva

To me, this question is incomplete.

We're paying:

1.2*LIBOR on an inverse floater

Receiving:

4.4% on a swap

6% on a bond


Yet, the question doesn't specify the terms of the floating rate side of the swap. Is it LIBOR flat, or LIBOR plus a spread? Obviously, for hedging purposes we can assume the floating rate could be 1.2*LIBOR but that may be an unrealistic assumption.

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