Interest Rate Swap Apple pays a floating LIBOR +.25% and receives 5% fixed from Tesla. Current LIBOR is 3% next two years is 5%, 7%.

Interest Rate Swap

Apple pays a floating LIBOR +.25% and receives 5% fixed from Tesla. Current LIBOR is 3% next two years is 5%, 7%. You are apple banks, design an interest rate swap to hedge Apple's interest rate exposure.

Also design two swaps when Apple pays fixed 4% and receives LIBOR +2% from Tesla. Current LIBOR is 4%. Next year it will be 6% then 1%.

https://www.sec.gov/Archives/edgar/data/320193/000119312513191849/d527270d424b2.htm