a) Suppose that the two-year swap rateiscurrently 6 per cent and that you are interested in entering an interest rate swap as the fixed-rate payer. How could you check whether the rateisfair? (2 marks)

b) Given an inverse yield curve, would the fixed-rate payer in a plain vanilla swap expect to payorreceive the firstnetswap payment. Why? (2marks)

c) Explain why an issuer of 90-day bills in a two-year bill facility might wish to enter afixed-for- floating interest rate swap. (2marks)