Company A can borrow money at a fixed rate of 7.5 percent or a variable rate set at prime plus 0.5 percent.Company B can borrow money at a variable rate of prime plus 1 percent or a fixed rate of 7 percent.Company A prefers a fixed rate and company B prefers a variable rate.Given this information,which one of the following statements is correct?
A)Company A can swap with B and pay a fixed rate of 7.25 percent.
B)If Company A swaps with B, Company A could pay a fixed rate of 6.5 percent.
C)If Company B swaps with A, Company B must pay a fixed rate of 8 percent.
D)Company B can swap with A such that Company B pays the variable prime rate.
E)There are no terms under which both Company A and Company B can swap interest rates and both realize a profit.

Question

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The Answer of Company A can borrow money at a fixed rate of 7.5 percent or a variable rate set at prime plus 0.5 percent.Company B can borrow money at a variable rate of prime plus 1 percent or a fixed rate of 7 percent.Company A prefers a fixed rate and company B prefers a variable rate.Given this information,which one of the following statements is correct?
A)Company A can swap with B and pay a fixed rate of 7.25 percent.
B)If Company A swaps with B, Company A could pay a fixed rate of 6.5 percent.
C)If Company B swaps with A, Company B must pay a fixed rate of 8 percent.
D)Company B can swap with A such that Company B pays the variable prime rate.
E)There are no terms under which both Company A and Company B can swap interest rates and both realize a profit.

Company a Can Borrow Money at a Fixed Rate of 7.5