QUESTION 4 (100 marks) a. Plaza PLC and Impact PLC have been offered the following rates per annum on a 5 million 10-year investment: Fixed rate Floating rate LIBOR 8% Plaza PLC Impact PLC 8.8% LIBOR Plaza PLC requires a fixed-rate investment, and Impact PLC requires a floating-rate investment. Design a swap that will net a bank, acting as an intermediary, 0.2% per annum and that will appear equally attractive to both Plaza and Impact. (50 marks) b. Construct a table displaying the cashflows of Plaza PLC, Impact PLC, and the bank. Assume payments are made semi-annually, and that LIBOR is fixed at 5% throughout the life of the swap. (50 marks) QUESTION 4 (100 marks) a. Plaza PLC and Impact PLC have been offered the following rates per annum on a 5 million 10-year investment: Fixed rate Floating rate LIBOR 8% Plaza PLC Impact PLC 8.8% LIBOR Plaza PLC requires a fixed-rate investment, and Impact PLC requires a floating-rate investment. Design a swap that will net a bank, acting as an intermediary, 0.2% per annum and that will appear equally attractive to both Plaza and Impact. (50 marks) b. Construct a table displaying the cashflows of Plaza PLC, Impact PLC, and the bank. Assume payments are made semi-annually, and that LIBOR is fixed at 5% throughout the life of the swap. (50 marks)