9. Company A wants to borrow at a floating rate and Company B wants to borrow at a fixed rate. The companies are offered the following rates in financial markets:

FixedFloating

Company A 3%LIBOR + 1.5%

Company B 4% LIBOR + 2%

Design a swap between A and B that meets the following criteria:

i.Company A will initially borrow fixed and Company B will borrow floating

ii.The notional principal is $100,000,000

iii. The parties share the savings from the swap equally

Show a labeled diagram of the swap.(8 points)