Company AA and company BB each need $1 million in funds and are quoted the following rates in the fixed and floating markets. AA agrees to borrow at the fixed-rate and BB agrees to borrow at the floating-rate. Show all calculations. Debt market AA BB Fixed rate funds 5.4% 6.4% Variable rate funds BBSW + 2% BBSW + 2.2% Required: a) Structure a swap which allows the two companies to share the differential benefit equally. (8 marks) b) What fixed rate would AA receive from BB if they negotiated to receive 75% share of the differential? c) Why would a swap be arranged even if the differential is zero. (3 marks) d) List and briefly explain the three basic types of swaps. (6 marks) (2 marks)