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Question Ten (20 Marks) a) Explain the features of interest rate swap (9marks) b) On July 312019 , company A and company B enters into

image text in transcribed Question Ten (20 Marks) a) Explain the features of interest rate swap (9marks) b) On July 312019 , company A and company B enters into a five year swap with the following terms; Company A pays company B an amount equal to 8% (fixed interest rate) per annum on a notional principal of $250,000 Company B pays company A an amount equal to one year LIBOR +2% per annum on a notional principal of $250,000 Decide the pay off for both the parties. (11marks)

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