Company X wants to borrow $10,000,000 floating for 5 years; company Y wants to borrow $ 10,000,000 fixed for 5 years. Their external borrowing opportunities are shown here:

Fixed-Rate Borrowing Cost: Company X 10% Company Y 12%

Floating-Rate Borrowing Cost: Company X LIBOR, Company Y LIBOR+ 1.5%

A swap bank is involved and quotes the following for five-year dollar interest rate swaps: 10.05%-10.45% against LIBOR flat. Assume both X and Y agree to the swap banks terms. What is the right outcome?

a. company X swaps 10.05% with swap bank for LIBOR, netting 9.95%, saving 0.05%

b. Company Y swaps LIBOR with swap bank for 10.45%, netting 11.95%, saving 0.05%

c. Swap bank makes 0.40% of spread, and they bid-ask could be negotiated

d. all of the above.