JP Morgan makes A 3-year, $10 million, 4% fixed-rate loan to IBM. The loan is financed with one-year CDs. Interest on the CDs is to be reset annually To hedge interest rate risk, JP Morgan enters into a $10 million, 3-year plain vanilla SWAP contract with Nationwide Insurance. JP Morgan agrees to pay fixed rate of interest of 2.5%, while Nationwide will pay LIBOR+0.5%. Payments will be settled at year-end during the next three years. What are the SWAP payments each year based on the following year-end LIBOR rates? Year 1 Year 2 Year 3 LIBOR + 2% LIBOR = 3% LIBOR-15 Multiple Chalce Yeart no payments Year 2: JP Morgan pays Nationwide $100,000 Yene 3: Nationwide pays JP Morgan $100,000 Yeart no payments Year 2. JP Morgan pays Nationwide $350,000 Year Nationwide pays JP Morgan $150,000 Yeart na gayments "Year 2 Nationwide pays $100,000 to JP Morgan Year JP Morgon pays $100.000 to Nationwide JP Morgan makes A 3-year, $10 million, 4% fixed-rate loan to IBM. The loan is financed with one-year CDs. Interest on the CDs is to be reset annually To hedge interest rate risk, JP Morgan enters into a $10 million, 3-year plain vanilla SWAP contract with Nationwide Insurance. JP Morgan agrees to pay fixed rate of interest of 2.5%, while Nationwide will pay LIBOR+0.5%. Payments will be settled at year-end during the next three years. What are the SWAP payments each year based on the following year-end LIBOR rates? Year 1 Year 2 Year 3 LIBOR + 2% LIBOR = 3% LIBOR-15 Multiple Chalce Yeart no payments Year 2: JP Morgan pays Nationwide $100,000 Yene 3: Nationwide pays JP Morgan $100,000 Yeart no payments Year 2. JP Morgan pays Nationwide $350,000 Year Nationwide pays JP Morgan $150,000 Yeart na gayments "Year 2 Nationwide pays $100,000 to JP Morgan Year JP Morgon pays $100.000 to Nationwide