. Q1. Suppose that company XYZ and Company ABC enter into a ten-year swap with the following terms: Company XYZ pays Company ABC an amount equal to 3.5% per annum on a notional principal of $50 million, Company ABC pays Company XYZ an amount equal to one-year LIBOR +1.5% per annum on a notional principal of $100 million. Assume that LIBOR is 4%. a. Show the cash flows cach party pays the other. b. Assume after 4 years, LIBOR increases to 5.5%, what would happen? c. Assume after 6 years LIBOR decreases to 3.5%, what would happen? Q2. Let's assume a company's shares have a current market price of $100. An investor wants to purchase a call option with a strike price of $110 and an option price of $6 (since call option contracts include 100 shares, the total cost of the call option would be $600) 1. What would happen in the price at expiration is SIOS. 2. What would happen in the price at expiration is $113. 3. What would happen in the price at expiration is $116. 4. What would happen in the price at expiration is $125