Companies A and B have been offered the following rates per annum on a 10 million kr 4-year investment:

Company a fixed rate: 6% and floating rate is LIBOR

Company b fixed rate : 6.6% and floating rate is LIBOR + 0.1%

B)A swap can be viewed as a package of zero coupon bonds and floting rate bonds. Carefully explain this statement. If you need to introduce any notation, you should define it clearly. No calculations are needed. 2

(c) A swap can be viewed as a package of forward rate agreements. Carefully explain this statement. If you need to introduce any notation, you should define it clearly. No calculations are needed.

I don't understand these questions that I found in my text book, I would appreciate if someone could explain to me. Thank you very much for the help in advance