For introducing the two counterparties and setting up the SWAP, the investment bank commands a total fee of 0.4%. b) Identify the form of borrowing each counterparty would need to be seeking in order for a swap to be viable. [1 mark] Prior to allowing for the introduction fee, it has been agreed that the total benefit of the swap should be split 2 : 1 in favour of the counterparty with the strongest credit rating. The counterparties have also agreed to split the introduction fee equally between themselves. c) Calculate how much each party can save from utilising the SWAP in terms of the reduction in interest rates compared to borrowing the chosen forms of finance directly. [3 marks] For introducing the two counterparties and setting up the SWAP, the investment bank commands a total fee of 0.4%. b) Identify the form of borrowing each counterparty would need to be seeking in order for a swap to be viable. [1 mark] Prior to allowing for the introduction fee, it has been agreed that the total benefit of the swap should be split 2 : 1 in favour of the counterparty with the strongest credit rating. The counterparties have also agreed to split the introduction fee equally between themselves. c) Calculate how much each party can save from utilising the SWAP in terms of the reduction in interest rates compared to borrowing the chosen forms of finance directly. [3 marks]