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Companies WMM and KLL have been offered the following rates per annum on a $50 million 5-year investment, shown in Exhibit 3. KLL requires a
Companies WMM and KLL have been offered the following rates per annum on a $50 million 5-year investment, shown in Exhibit 3. KLL requires a fixed-rate investment while WMM wishes to invest at a floating rate of interest. Exhibit 3: Interest rates Task 3.1: [10 marks] This task requires you to design a vanilla swap that allocates 65% advantage (i.e. gain) to WMM and 35\% advantage (i.e. gain) to KLL. Assume that a financial institution, acting as an intermediary, is planning to charge a 0.3% premium
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