swap

Company X intends to borrow US dollars based on a fixed interest rate, while company Y intends to borrow in Australian dollar also based on a fixed interest rate. The loan amounts are approximately the same, taking into account the current exchange rate. The following loan rates have been proposed to companies to reflect the risks associated with their current situation: Section 2: Company X gets offers. AUD 8.04. USD 6.64 Company Y gets offers AUD 9.854. USD 7 1. Design a swap that will allow the bank us un intermediary institution to achieve a profit of 60 bpt per year cassuming that the entire currency risk is taken over by the bank) and the same time will bring the same profit to X and Y compared to the initial situation. Without a swap contract. (15 marks 2. Explain why some companies that issue bonds engage in curency swips. Why do they not simply issue bonds in the currency that they would prefer to the for making payments