financial markets ...please attempt number "b" thank you

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a. Royal Bank of Scotland (RBS) was bailed out by the Government during the global financial crisis of 2007-08, RBS took excessive risk after being bailed out. Critically evaluate this statement with respect to adverse selection and moral hazard problem. (Max 250 words) [10 marks] b. Firm XYZ enters a 5-year swap with firm XYZ to pay LIBOR in return for a fixed 8% rate on notional principal of $10 million. Three years from now, the market rate on 2-year swap is LIBOR for 6%; at this time, firm ABC goes bankrupt and defaults on its swap obligation. 1. Which firm is worse off by the default of ABC and what is their loss? [5 marks] ii. What is the market value of the loss incurred by the firm that is worse off? [5 marks]