A companys investments earn LIBOR minus 0.5%.

Question

The company also borrowed money at 5.1% for five years and wishes to convert this borrowing to a floating-rate liability by making use of the swap quotes in table 1, explain how this can be don

Table 3: Swap quotes made by market maker (percent per annum). Maturity ( years) 2 3 4 5 7 10 Bid 2.55 2.97 3.15 3.26 3.40 3.48 Offer 2. 58 3.00 3.19 3.30 3.44 3.52 Swap rate 2.565 2.985 3.170 3.280 3.240 3.500