3. Your tirm enters into a swap agreement with a notional principal of $25 million wherein the firm pays a fixed rate of interest of 3.75 percent and receives a variable rate of interest equal to LIBOR plus 50 basis points. If LIBOR is currently 3.50 percent, what is the NET amount your firm will receive (+) or pay () on the next transaction date? 4. After conducting a rate-sensitive analysis, a bank finds itself with the following amounts of rate-sensitive assets and liabilities (RSAs and RSL) and fixed-rate assets and liabilities (FRAs and FRLs); the rate of return and cost rates on the accounts are also given: 1 Suppose the institution wishes to fully hedge the interest rate risk with a swap. A swap is available with whatever notional principal is needed that pays fixed at 1.95 percent and pays variable at LIBOR. LIBOR is currently 2.11 percent. By how much would profits change right now if the bank engages in the swap? 3. Your tirm enters into a swap agreement with a notional principal of $25 million wherein the firm pays a fixed rate of interest of 3.75 percent and receives a variable rate of interest equal to LIBOR plus 50 basis points. If LIBOR is currently 3.50 percent, what is the NET amount your firm will receive (+) or pay () on the next transaction date? 4. After conducting a rate-sensitive analysis, a bank finds itself with the following amounts of rate-sensitive assets and liabilities (RSAs and RSL) and fixed-rate assets and liabilities (FRAs and FRLs); the rate of return and cost rates on the accounts are also given: 1 Suppose the institution wishes to fully hedge the interest rate risk with a swap. A swap is available with whatever notional principal is needed that pays fixed at 1.95 percent and pays variable at LIBOR. LIBOR is currently 2.11 percent. By how much would profits change right now if the bank engages in the swap