4. The treasurer of a small bank has borrowed funds for 1 month at an interest rate of 4% and has lent funds for 5 months at 6%. The treasurer borrowed and lent 1 million dollars in t. a. Represent the exposure on cash flow diagrams. Be specific on the size of the cash flows in each period. b. The treasurer decides to wait 1 month and take a spot loan then. To cover his exposure, the treasurer signs a 1x5 FRA. (i) Use cash flow diagrams to show how this achieves his goal. (ii) What is his outflow in the FRA at the break-even forward rate? 4. The treasurer of a small bank has borrowed funds for 1 month at an interest rate of 4% and has lent funds for 5 months at 6%. The treasurer borrowed and lent 1 million dollars in t. a. Represent the exposure on cash flow diagrams. Be specific on the size of the cash flows in each period. b. The treasurer decides to wait 1 month and take a spot loan then. To cover his exposure, the treasurer signs a 1x5 FRA. (i) Use cash flow diagrams to show how this achieves his goal. (ii) What is his outflow in the FRA at the break-even forward rate