A company's investments earn LIBOR minus 0.5%.

Table 1 Swap quotes made by market maker (percent per annum)

Maturity (years) Bid Offer Swap rate

2 2.55 2.58 2.565

3 2.97 3.00 2.985

4 3.15 3.19 3.170

5 3.26 3.30 3.280

7 3.40 3.44 3.420

10 3.48 3.52 3.500

Use Table 1 to explain how the company can use the quoted rates to convert the investments to

(a) Two-year fixed rate investment

(b) Seven--year fixed-rate investments.

(c) 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 done.

Please explain exactly how the answers are calculated. thank you very much