3. (6 pts) Alpha Company and Beta Company are looking to borrow money for 3 years Assume the following information for Alpha and Beta Companies: Fixed Rate Bond loating Rate Bond Alpha Co. can Borrow from Bank X at Beta Co. can borrow from Bank Y at 5.8% 6.9% LIBOR + 2.0% LIBOR + 2.7% Assume Alpha believes the LIBOR Rate will stay at 3.5% for the next 3 years. Given Alpha's expectations, what type of bond would Alpha prefer (Fixed or Floating)? a) b) However, Beta believes the Libor will be at 3.5% this year but increase to 45% before the reset period for the year 2 interest rate, and increase to 5.5% before the reset period for the year 3 interest rate. Given Beta's expectations, what type of bond would Beta prefer? (Fixed or Floating) c) What type of borrowing does Alpha have a comparative advantage in (Fixed or Floating)? d) What type of borrowing does Beta have a comparative advantage in (Fixed or Floting)? e) Describe how you know that an interest rate swap be possible between Alpha and Beta