Lluvia Manufacturing and Paraguas Products both seek funding at the lowest possible cost. Lluvia is the more credit$-$worthy company. It could borrow at LIBOR$+1\%$ or it could borrow fixed at $8\%.$ Paraguas could borrow fixed at $12\%$ or it could borrow floating at LIBOR$+2\%.$

Lluvia would prefer the flexibility of floating rate borrowing, while Paraguas wants the security of fixed rate borrowing. What should they do$?$

A$)$ Lluvia could borrow fixed at $8\%$ and swap for floating rate debt.

B$)$ Paraguas could borrow floating at LIBOR$+2\%$ and swap for fixed rate debt.

C$)$ Both are right actions.

D$)$ None is right.