An Australian company has recently issued $5 million in floating rates notes that pay seminal annual coupon of BBSW plus 100 basis point. But the company is concerned about floating rates rising. To hedge such exposure, the company enters an intermediated swap with Commons Bank (CB), which sets a fixed rate of 6% per annum. If the reference rate (BBSW) in six months is 7 per cent, which party to the swap contract is required to make the first payment and how much?

Select one:

a.The CB; $25 000

b.The CB; $50 000

c.The company; $25 000

d.The company; $50 000