COMPANY A WISHES TO BORROW AT A VARIABLE RATE WHILE COMPANY B WANTS A FIXED

RATE. THE RATES AT WHICH THEY CAN BORROW IN THE MARKETPLACE

Entire problem is attached as word doc.

COMPANY A WISHES TO BORROW AT A VARIABLE RATE WHILE COMPANY B WANTS A FIXED RATE. THE RATES AT WHICH THEY CAN BORROW IN THE MARKETPLACE ARE AS FOLLOWS: COMPANY A Fixed 5% Variable Libor + .5 COMPANY B 6% Libor + .9 CONSTRUCT A SWAP BY WHICH BOTH COMPANIES CAN ACHIEVE WHAT THEY WANT AT RATES 0.3% POINTS BELOW THE MARKET RATES AVAILABLE TO THEM 5 % 6 %