Company A and Company B can borrow for a ten-year term at the following rates: Company A Company B Moody's credit rating AAA AA Fixed rate borrowing cost 7% 11% LIBOR+1% LIBOR+4% Floating rate borrowing cost a. Calculate the quality spread differential (QSD). (5 marks) b. Assuming that Swap Bank desires to earn 0.60% (please refer to Table 1 as shown below), compute the potential cost saving for each company A and B, if the ratio to divide the balanced cost saving is 4 (please refer to Table 1 below for your assigned rates). (5 marks) c. What are the effective cost savings for A and B.? (5 marks) d. Show the transactions designed for A by the Swap Bank for A to achieve its desired effective cost of borrowing. (5 marks) e. Show the transactions designed for B by the Swap Bank for A to achieve its desired effective cost of borrowing. (5 marks) (Note that: Please provide detailed transactions for each of the three counter parties with an illustration chart.) Company A and Company B can borrow for a ten-year term at the following rates: Company A Company B Moody's credit rating AAA AA Fixed rate borrowing cost 7% 11% LIBOR+1% LIBOR+4% Floating rate borrowing cost a. Calculate the quality spread differential (QSD). (5 marks) b. Assuming that Swap Bank desires to earn 0.60% (please refer to Table 1 as shown below), compute the potential cost saving for each company A and B, if the ratio to divide the balanced cost saving is 4 (please refer to Table 1 below for your assigned rates). (5 marks) c. What are the effective cost savings for A and B.? (5 marks) d. Show the transactions designed for A by the Swap Bank for A to achieve its desired effective cost of borrowing. (5 marks) e. Show the transactions designed for B by the Swap Bank for A to achieve its desired effective cost of borrowing. (5 marks) (Note that: Please provide detailed transactions for each of the three counter parties with an illustration chart.)