Question 2a
Marking Guide

Options
Buy put options 1
Number of contracts 1
Basis calculation 1
Premium calculation 1
Exercise option? 1
Final outcome 1

Swaps
Comparative advantage and recognition of benefit 2
Initial decision to borrow floating by Lurgshall Co and fixed by counterparty 1
 Swap impact 2
 Net benefit after bank charges 1
 Comments 3–4

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