A swap bank quotes the following pricing schedule for a Polish zloty coupon (interest rate) swap.

Coupon Swap Pricing Schedule (Polish zloty)

Maturity Bank Pays Fixed Rate Bank Receives Fixed Rate Current TN Rate 4 years 4 yr 4 yr 7.98%

This schedule assumes nonamortizing debt and semiannual rates (sa). Quotes are against 6-month LIBOR Polish zloty flat. rate.

a. Ford Motor Company has 4-year floating rate zloty debt at 6-

month LIBOR plus 45 bps. Ford wants to swap into fixed rate zloty debt. Describe Ford's floating-for-fixed zloty coupon swap.

b. Polish Motors (PM) has 4-year fixed rate zloty debt at 9.83 percent (BEY). PM wants to swap into floating rate zlotys.
Describe PM's fixed-for-floating zloty coupon swap.

c. What does the swap bank gain from these transactions?