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CIMAPRA19-F03-1 Exam - Topic 2 Question 130 Discussion

H Company has a fixed rate load at 10.0%, but wishes to swap to variable. It can borrow at LIBOR 8%.The bank is currently quoting swap rates of 3.1% (bid) and 3.5% (ask).What net rate will H Company pay if it enters into the swap?
C) LIBOR +6.9%
A) LIBOR +6.5%
B) LIBOR +8%
D) LIBOR +3.1%

CIMAPRA19-F03-1 Exam - Topic 2 Question 130 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 130
Topic #: 2
[All CIMAPRA19-F03-1 Questions]

H Company has a fixed rate load at 10.0%, but wishes to swap to variable. It can borrow at LIBOR 8%.

The bank is currently quoting swap rates of 3.1% (bid) and 3.5% (ask).

What net rate will H Company pay if it enters into the swap?

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Suggested Answer: C

by Juliann at Aug 14, 2026, 06:15 AM

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Lashon
4 days ago
This seems similar to a practice question where we calculated the effective rate after a swap. I think the fixed rate minus the swap rate is key here.
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Berry
9 days ago
I'm not entirely sure, but I think we might need to add the swap rate to LIBOR to find the net rate.
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Mauricio
14 days ago
I remember that when swapping from fixed to variable, we need to consider the difference between the fixed rate and the swap rate.
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