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Please, answer the below question with showing the entire steps very clearly. A bank provides loans at prime + 2% with a maximum charge of

Please, answer the below question with showing the entire steps very clearly.

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A bank provides loans at prime + 2% with a maximum charge of 10%. The bank depositors receive prime -2%. a) Calculate the net interest margin for the bank. b) A three-year SWAPTION at 10% fixed for LIBOR has a premium of 0.5%. Design a swaption strategy for the bank to protect the bank's net profit margin at about 4% given that the prime rate is expected to rise

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