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SCG and RMD both wish to invest $55 million in 5 years and have been offered the rates shown below. SCG wishes to invest at

SCG and RMD both wish to invest $55 million in 5 years and have been offered the rates shown below. SCG wishes to invest at a floating rate of interest, while RMD requires a fixed-rate investment.

Fixed Rate Floating Rate
SCG 2.8% LIBOR -1.5%
RMD 3.6% LIBOR +0.9%

Design a vanilla swap that allocates 70% advantage (ie. gain) to RMD and 30% advantage (ie. gain) to SCG. Assume that a financial institution, acting as an intermediary, is planning to charge a 0.4% premium.

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