3. Corporate loans are usually floating-rate liabilities. A firm's liability consists of $1 Billion 3-year loan that carries an interest of LIBOR+1.5%. The interest is pain annually. a. What is the risk associated with this loan? How does a 1% increase in LIBOR impact firm's pre-tax income? b. The company decides to use the LIBOR swap quotes in the following table to manage this risk. What fixed rate will the company pay on its 3-year loan? Maturity 1-Year 2-Year 3-Year 4-Year 5-Year LIBOR swap rate 1.66% 1.46% 1.38% 1.37% 1.35%