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