Institution X wants to borrow 10 mln USD for 3 years at floating interest rate, institution Y the same amount at fixed rate. The market offers are as follows: fixed floating 5,9% LIBOR 6M + 2,1% Y 5,4% LIBOR 6M + 0,7% a) Propose a swap contract when Y earns twice as much as X (no financial intermediary). Indicate flows and profit in percentage points of both institutions. b) If the we assume that we will observe following LIBOR 6M rates during the contract: Time LIBOR 6M now 4,0% in 0,5 year from now 4,1% in 1 year from now 4,2% in 1,5 year from now 4,3% calculate what flow in swap will occur in one year from now. Institution X wants to borrow 10 mln USD for 3 years at floating interest rate, institution Y the same amount at fixed rate. The market offers are as follows: fixed floating 5,9% LIBOR 6M + 2,1% Y 5,4% LIBOR 6M + 0,7% a) Propose a swap contract when Y earns twice as much as X (no financial intermediary). Indicate flows and profit in percentage points of both institutions. b) If the we assume that we will observe following LIBOR 6M rates during the contract: Time LIBOR 6M now 4,0% in 0,5 year from now 4,1% in 1 year from now 4,2% in 1,5 year from now 4,3% calculate what flow in swap will occur in one year from now