1. Alpha and Beta Companies can borrow for a five-year term at the following rates: Alpha Aa 10.5% LIBOR Beta Baa 12.0% LIBOR + 1% Moody's credit rating Fixed-rate borrowing cost Floating-rate borrowing cost a. Calculate the quality spread differential (QSD). b. Develop an interest rate swap in which both Alpha and Beta have an equal cost savings in their borrowing costs. Assume Alpha desires floating-rate debt and Beta desires fixed-rate debt. No swap bank is involved in this transaction. 2. Do problem 1 over again, this time assuming more realistically that a swap bank is involved as an intermediary. Assume the swap bank is quoting five-year dollar interest rate swaps at 10.7%-10.8% against LIBOR flat. 1. Alpha and Beta Companies can borrow for a five-year term at the following rates: Alpha Aa 10.5% LIBOR Beta Baa 12.0% LIBOR + 1% Moody's credit rating Fixed-rate borrowing cost Floating-rate borrowing cost a. Calculate the quality spread differential (QSD). b. Develop an interest rate swap in which both Alpha and Beta have an equal cost savings in their borrowing costs. Assume Alpha desires floating-rate debt and Beta desires fixed-rate debt. No swap bank is involved in this transaction. 2. Do problem 1 over again, this time assuming more realistically that a swap bank is involved as an intermediary. Assume the swap bank is quoting five-year dollar interest rate swaps at 10.7%-10.8% against LIBOR flat