X can borrow money at either a fixed rate of 7.5% or a variable rate set at prime plus 0.5%; Y can borrow money at either a variable rate of prime plus 1% or a fixed rate of 7.25%. X prefers a fixed rate and Y prefers a variable rate. Given this information, which one of the following statements is correct?

a) X and Y cannot swap interest rates in a manner that will be profitable for both firms.

b) After a swap with X, Y should end up paying a fixed rate of about 7.125%.

c) Both firms will profit if they swap a 7.35% fixed rate for a prime plus 0.75% variable rate.

d) Y should end up paying the prime rate if they do an interest rate swap with X.

e) X will end up paying no more than 7% as a fixed rate after a swap with Y.