(a) Suppose the risk-free spot rates are as follows Calculate forward interest rates for the second, third, fourth, and fifth years with (i) annual compounding and (ii) continuous compounding, respectively. ( 8 ) (b) Companies A and B have been offered the following rates per annum on a $20 million five-year loan: Company A requires a floating-rate loan; Company B requires a fixed-rate loan. Design a swap that will net a bank, acting as intermediary, 0.1% per annum and that will appear equally attractive to both companies. (6') Problem 2. (Put-call parity, 8') Suppose we have the following instruments: (i) risk-free bonds (risk-free rate is r, continuously compounded and annualized), (ii) shares of a stock that does not pay dividends, (iii) European call options on shares of that stock with strike K and time to maturity T. Please find the (static) replicating portfolio for a European put option with the same underlying asset, strike K, and time to maturity T, and present the cash-flow table for your replicating portfolio