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Need help on this practice question. Company X can borrow at a floating rate of prime plus 1 percent or at a fixed rate of

Need help on this practice question.

Company X can borrow at a floating rate of prime plus 1 percent or at a fixed rate of 10 percent. Company Y can borrow at a floating rate of prime plus 2 percent or at a fixed rate of 9.5 percent. Company X would like a fixed-rate loan, while Company Y would like a floating-rate loan. What would be an appropriate transaction?

A) Company X swaps its 10% fixed-rate loan for Company Y's prime plus 2% floating-rate loan

B) Company X swaps its 9.5% fixed-rate loan for Company Y's prime plus 1% floating-rate loan

C) Company X swaps its prime plus 2% floating-rate loan for Company Y's 10% fixed- rate loan

D) Company X swaps its prime plus 1% floating-rate loan for Company Y's 9.5% fixed-rate loan

E) No transaction can be agreed upon - Company X borrows at a 10% fixed rate and Company borrows at a floating rate of prime plus 2%

Is it D?

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