1. Assume that Microsoft buys a swap with Intel. If the fixed rate is 5.2%. what is the new rate for Microsoft if their existing liability is LIBOR plus 0.2%?

A. 5.4%.

B. 0.2%.

C. 5%.

D. 4.6%.

2. Swap rate is 5%. MSFT has an existing liability of Libor+0.2% and MSFT is the buyer of the swap. After the swap, how much does MSFT pay?

A. 5%.

B. Libor+0.2%.

C. 4.8%.

D. 5.2%.