Question: Company A can take a fixed based rate 2Y loan (3%, pa., semiannual compounding) or a floating based rate 2Y loan (LIBOR - 0,5%, pa.,

Company A can take a fixed based rate 2Y loan (3%, pa., semiannual compounding) or a floating based rate 2Y loan (LIBOR - 0,5%, pa., semiannual compounding). Company B can take a fixed based rate 2Y loan (3,6%, pa., semiannual compounding) or a floating based rate 2Y loan (LIBOR, pa., semiannual compounding). Assume that both companies would like to enter a 2Y SWAP contract with payments each 6M and would like to secure themselves by involving a financial institution. What SWAP agreement should be drawn between Company A and financial institution, so that profit from a comparative advantage strategy is distributed in the following way: 40% for Company A, 30% for Company B and 30% for financial institution?

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