4. a) If you are a fixed rate payer and a floating rate receiver in an interest rate swap what is your equivalent position in a straight fixed bond and a floating rate bond? Would you benefit from an increase or decrease in Libor interest rates? (5%) b) The spread betting market for a digital option on the weekly FTSE100 to be above 6925 is 20 30 (see below). FTSE 100 Deal O D FTSE 100 11 21 6620.86 -526 7000.00 Dan 4D TA ordeling watofnah 273 26 330 3919 26 1726 700.00 2000 G 153 253 26 6000 200 300 25.3353 6930 6875 310 410 6600.00 18 25 porn 434 534 500.00 498 25 6.1 6161 500 Net oft Toeeeeee ET LEO Max Pro 2021 You decide to buy 10 at this market price. Explain your risk to return outcomes if the FTSE100 closes the w at i) ii) 6850 6950 (5%) 4. a) If you are a fixed rate payer and a floating rate receiver in an interest rate swap what is your equivalent position in a straight fixed bond and a floating rate bond? Would you benefit from an increase or decrease in Libor interest rates? (5%) b) The spread betting market for a digital option on the weekly FTSE100 to be above 6925 is 20 30 (see below). FTSE 100 Deal O D FTSE 100 11 21 6620.86 -526 7000.00 Dan 4D TA ordeling watofnah 273 26 330 3919 26 1726 700.00 2000 G 153 253 26 6000 200 300 25.3353 6930 6875 310 410 6600.00 18 25 porn 434 534 500.00 498 25 6.1 6161 500 Net oft Toeeeeee ET LEO Max Pro 2021 You decide to buy 10 at this market price. Explain your risk to return outcomes if the FTSE100 closes the w at i) ii) 6850 6950 (5%)