a) The table below shows the 5-year fixed-rate borrowing costs to Firm A and Firm B in US dollars (USD) and Australian dollars (AUD).

Borrowing rates providing basis for currency swap.

	USD	AUD
Firm A	5.0%	7.5%
Firm B	7.0%	8.0%

Required: Assume that the amounts required by the two companies are roughly the same at the current exchange rate. Design a swap that will net a bank, acting as intermediary, 30 basis points per annum and that will appear equally attractive to both companies and ensure that all foreign exchange risk is assumed by the bank. b) Discuss whether the following statement is true or false: Collateral debt obligation is a contract that provides insurance against the risk of a default by particular company. Use no more than 300 words. c) In your own words, critically discuss the reasons for which two companies may wish to undertake a swap. Use no more than 400 words.