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Questions 1 (10 points): Based on your view of bank risks, you believe that from t = 1 to t = 10, the average difference
Questions 1 (10 points): Based on your view of bank risks, you believe that from t = 1 to t = 10, the average difference between LIBORt 1,1 and rt 1,1 will be greater than what is currently priced into the market. What is the name of the trade that you would put on to exploit this view? Describe how you put on the trade, and the cash flows from t = 1 to t = 10 with this trade.
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