A. Companies X and Y have been offered the following rates per annum on a 1 million dollar investments

Company: Fixed Rate (in percent) / Floating rate (in percent)

X: 9.97/ LIBOR + 0.5

Y. 11.7 / LIBOR + 0.6

Company X requires a fixed rate investment and company Y requires a floating rate investment. Design a swap that will net a bank acting as a financial intermediary (F.I) 30 percent of the benefits and be equally attractive to both of the companies. Draw a complete picture to show the exact transactions and check the F.I, X, and Y are better off in your swap deal by receiving benefits exactly as asked. Find the following in your swap scheme with all numerical values:

1. Benefit of swap in dollar per year.

2. Return on Y's investment in capital markets in dollar per year.

3. Receipt by F.I from Y in dollar per year

4. Receipt by X from F.I in dollar per year