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show all work. QUESTION 6 (10 POINTS Goldman Sachs Investment Bank has two companies as customers who are in the process of raising funds and

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QUESTION 6 (10 POINTS Goldman Sachs Investment Bank has two companies as customers who are in the process of raising funds and each has different views on the interest rate movements in the future. Company A thinks that interest rates would stay low and Company B feels that rates will rise Company A offered either a Fixed Rate of 7.0% or Float LIBOR + 75 bps Company B offered either a Fixed Rate of 8.25% or Float LIBOR + 150 bps Given the different views, the broker recommends that Company A and Company B get into Swap Agreement with a 6.50% Swap price as follows: Show the a) net interest pay and b) benefits for both parties

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