1. (complete chart) Bank of America sells a 12 year fixed ratebond at 6%. At the same time of the issue the company buys areceiver swaption, 6% and paying variable rate based on LIBOR with5 years remaining to expiration, 2.5% premium. Fill in the tablebelow assuming the exercise of the swaption - complete bond
2. Explain the net effect to BOA
3. Explain the net effect to bondholders
please write legible
| Year | LIBOR at Year end | BOA pays to bond holders | BOA pays to swaption | BOA receives from swaption | Net Cost to BOA |
| 1 | 10% | | | | |
| 2 | 12% | | | | |
| 3 | 9% | | | | |
| 4 | 8% | | | | |
| 5 | 11% | | | | |
| 6 | 7% | | | | |
| 7 | 5% | | | | |
| 8 | 4% | | | | |
| 9 | 6% | | | | |
| 10 | 2% | | | | |
| 11 | 4% | | | | |
| 12 | 7% | | | | |
