4. A finance company's main asset is a 1-year loan of $100 million to a MNC. On its 1-year loans, the company earns the prime rate + 4% per annum. The current prime rate is 6% per annum. Suppose that the finance company has financed this loan by raising $ 100 million through the issuance of a 5-year bond, which pays annually interest at the rate of 7%. Calculate the net interest income of the company in its first year. What is the type of risk the finance company is facing? If the finance company wants to hedge against its risk by using an interest rate swap, should the company be a floating rate receiver or a fixed rate receiver in the swap. (1 Mark)