Investment Banks, Hard Bank (HB) and Soft bank (SB) have been offered the following investment rates per annum: Bank HB SB Fixed Rate 9.1% 10.7% Floating Rate Libor 0.30% Libor + 0.50% Hard Bank requires fixed rate investment and Soft bank requires floating rate investment. (a) How much total benefit (% p.a.) can be extracted from a swap based on the interest rates listed in the table? (b) If a Middle Bank (MB), acting as intermediary receives 0.2% per annum, calculate the distribution of the remaining benefit if: (i) HB takes 40% share and What effective investment rate will? (ii) SB takes 60% share (iii) HB receive (iv) SB receive (c) Draw a diagram showing the flow of funds. As part of the arrangement, where HB pays LIBOR to MB and the MB pays LIBOR to SB.