7. Company X and Company Y can borrow for a five-year term at the following rates: Company ABC Company XYZ Credit Rating Fixed rate Floating rate 10.0% LIBOR 12.0% LIBOR +1% Assume that a swap bank is quoting five-year dollar interest rate swaps at 10.4-10.6 percent against LIBOR flat a) Compute the quality spread differential (QSD) and interpret the results. (SPts) b) Develop an interest rate swap in which both companies have an equal cost saving in their borrowing costs. Assume Company ABC prefers floating-rate debt and Company XYZ prefers fixed-rate debt. By using the intertest swap, what is the cost savings for each company and the profit for the swap bank? (12 Pts)