Baa 1) Alpha and Beta Companies can borrow for a five-year term at the following rates: Alpha Beta Moody's credit rating Aa Fixed-rate borrowing cost 10.5% 12.0% Floating-rate borrowing cost LIBOR LIBOR + 1% a. Calculate the quality spread differential (QSD). (5pts) b. Assuming that a swap bank is involved as an intermediary. Assume the swap bank is quoting five-year dollar interest rate swaps at 10.7% - 10.8% against LIBOR flat. After the swap, what is Alpha's floating-rate all-in-cost? What is Beta's fixed-rate all-in-cost? What is the annual cost saving (or profits) in dollar terms for Alpha, Beta and the swap bank if the loan principal is $100 million? Please show the picture for the transactions among all the parties. (10pts) Baa 1) Alpha and Beta Companies can borrow for a five-year term at the following rates: Alpha Beta Moody's credit rating Aa Fixed-rate borrowing cost 10.5% 12.0% Floating-rate borrowing cost LIBOR LIBOR + 1% a. Calculate the quality spread differential (QSD). (5pts) b. Assuming that a swap bank is involved as an intermediary. Assume the swap bank is quoting five-year dollar interest rate swaps at 10.7% - 10.8% against LIBOR flat. After the swap, what is Alpha's floating-rate all-in-cost? What is Beta's fixed-rate all-in-cost? What is the annual cost saving (or profits) in dollar terms for Alpha, Beta and the swap bank if the loan principal is $100 million? Please show the picture for the transactions among all the parties. (10pts)