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ABC wishes to borrow British pounds (GBP) at a fixed interest rate, XYZ wishes to borrow US dollars (USD) at a fixed interest rate. They

ABC wishes to borrow British pounds (GBP) at a fixed interest rate, XYZ wishes to borrow US dollars (USD) at a fixed interest rate. They both need to borrow the same amount of money in dollar terms. Their borrowing rates in each currency are shown in the table below. image text in transcribed

Company USD GBP

If an intermediary is taking out 0.50% per year as a fee, design a swap that will be equally beneficial to both counterparties.

Company USD GBP ABC XYZ 5.0% 6.0% 6.0% 6.3%

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