Company A:
US Dollars (floating rate): LIBOR +0.5%
Canadian Dollars (fixed rate): 5.0%
Company B:
US Dollars (floating rate) LIBOR +1.0%
Canadian Dollars (fixed rate): 6.5%
Assume that A wants to borrow US dollars at a floating rate of interest and B wants to borrow Canadian dollars at a fixed rate if interest. A financial institution is planning to arrange a swap and requires a 50-basis-point spread. If the swap is equally attractive to A and B, what rates of interest will A and B end up paying?