The bank has a variable rate loan and wants to protect itself from rising interest rates. They enter into an interest rate swap agreement with a counterparty. How would a properly structured interest rate swap benefit the company in this scenario?

a$.$

The company agrees to pay a variable interest rate and receive a fixed interest rate from the counterparty. If interest rates rise, the company will be locked into a lower fixed rate, protecting them from higher variable rates.

b$.$

The company agrees to pay a fixed interest rate and receive a floating interest rate from the counterparty. If interest rates rise, the company will benefit from receiving a higher floating rate.

c$.$

The company enters into a swap agreement with a variable notional amount that adjusts based on interest rate fluctuations.

d$.$

The company agrees to exchange a fixed principal amount with the counterparty at the beginning and end of the swap agreement.

e$.$

The company pays a premium upfront to the counterparty in exchange for the right, but not the obligation, to fix the interest rate on the loan at a future date.