Companies A and B have been offered the rates shown in the table below. Company A requires a floating-rate loan, while company B requires a fixed-rate loan.

	Fixed rate	Floating rate
Company A	5.25%	Libor + 115 bps
Company B	6.4%	Libor + 145 bps

(a) Design a swap equally attractive to both companies that provides a fee of 45 bps to the bank. Show the net payment for both companies.

(b) Briefly discuss the different risks inherent in an interest rate swap agreement.