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Design a swap that will net a bank

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Reference no: EM133120813

Companies X and Y have been offered the following rates per annum on a $5 million 3-years investment: 

 

Fixed Rate

Floating Rate

Company X

6.0%

LIBOR

Company Y

6.8%

LIBOR + 0.2%

Company X requires a fixed-rate investment; company Y requires a floating-rate investment. Design a swap that will net a bank, acting as intermediary, 0.2% per annum and will appear equally attractive to X and Y.

Reference no: EM133120813

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