16. Company A, a British manufacturer, wishes to borrow US dollars at a fixed rate of interest. Company B, a US multinational, wishes to borrow sterling at a fixed rate of interest. They have been quoted the following rates per annum (adjusted for differential tax effects) (15 points) Company A Company B Sterling 11.0% 10.6% US Dollars 7.0% 6.0% a. Show that it would be justified (via the idea of comparative advantage) for a bank to intermediate a swap where it nets 10 basis points and produces a gain of 25 basis points for each of the two companies. b. Show a possible swap implementing this transaction through a cash flow diagram (fill in below) Company A Company B Financial Institution C. What risk does the bank take on? Can it hedge this risk? How