QUESTION 4 a. Kermit PLC and Cintron PLC have been offered the following rates per annum on a 10 million 5-year loan: Kermit PLC Cintron PLC Fixed rate 5% 6.4% Floating rate LIBOR +0.1% LIBOR +0.6% Kermit PLC requires a floating-rate loan, and Cintron PLC requires a fixed-rate loan. Design a swap that will net a bank, acting as an intermediary, 0.1% per annum and that will appear equally attractive to both companies. (30% question weight) b. Construct a table displaying the cashflows of Kermit PLC, Cintron PLC, and the bank. Assume payments are made semi-annually, and that LIBOR is fixed at 4.2% throughout the life of the swap. (30% question weight) C. Critically discuss why the 10-year LIBOR rates are higher than the 10-year swap rates. (40% question weight)