The following table shows the market rates for Company A and B in the fixed rate market and the floating rate market.

Company A

Company B

Fixed

8.3%

9.2%

Floating

LIBOR+20bp

LIBOR+50bp

Suppose a financial intermediary makes the following proposal. Company A will borrow in the fixed rate market, and Company B will issue debt in the floating rate market. Then, Company A will pay LIBOR + 20bp to the intermediary, which in turn will pay LIBOR + 10bp to Company B. Company B will pay 8.7% fixed rate to the intermediary, and the intermediary will pay 8.6% to Company A.

Which of the following statements is theleastaccurate?

a.Company B has a comparative advantage in floating rate borrowing.

b.Company A gains 0.3% from the swap.

c.The intermediary gains 0.2% from the swap.

d.Company A has an absolute advantage in fixed rate borrowing.

e.Company B gains 0.2% from the swap.