6. Company A wants to borrow at a floating rate and Company B wants to borrow at a fixed rate. The companies are offered the following rates in financial markets: Fixed Company A 4% Company B 5% Floating LIBOR + LIBOR + Design a swap between A and B that meets the following criteria: i. Company A will initially borrow fixed and Company B will borrow floating ii. The notional principal is $100,000,000 iii. The parties share the savings from the swap equally Show a labeled diagram of the swap. (8 points) 4% fixed LIBOR+.50/0 4.25% fixed LIBOR+I% A's net position - 4.25 - 4 - (LIBOR + .50/0) - - (LIBOR + .25%) B's net position = LIBOR + .50/'0 - (LIBOR + 1%) - 4.25% fixed = - 4.75% fixed So each party is .25% better off after the swap