(5 points) Company A and Company B have been offered the following rates per annum on a $45 million, 6- year loan: Fixed rate Floating rate Company A 7.50% LIBOR +0.40% Company B 6.80% LIBOR + 0.25% Company A requires a fixed-rate loan, and Company B requires a floating-rate loan. 1.(4 points) Design a swap that will (i) allow both companies to borrow at the lowest costs with their required types of interest rates, (ii) net a bank, acting as the intermediary, 7 basis points per annum, and (iii) appear equally attractive to both companies. 2. (1 point) As a result of this swap, which company will be exposed to interest rate risk? Briefly describe a situation that justifies this company's decision in taking on its swap position. (5 points) Company A and Company B have been offered the following rates per annum on a $45 million, 6- year loan: Fixed rate Floating rate Company A 7.50% LIBOR +0.40% Company B 6.80% LIBOR + 0.25% Company A requires a fixed-rate loan, and Company B requires a floating-rate loan. 1.(4 points) Design a swap that will (i) allow both companies to borrow at the lowest costs with their required types of interest rates, (ii) net a bank, acting as the intermediary, 7 basis points per annum, and (iii) appear equally attractive to both companies. 2. (1 point) As a result of this swap, which company will be exposed to interest rate risk? Briefly describe a situation that justifies this company's decision in taking on its swap position