Company X and Company Y Have Been Offered the Following

Multiple Choice

Company X and Company Y have been offered the following rates $\begin{array} { | l | l | l | } \hline & \text { Fixed Rate } & \text { Flaating Rate } \\\hline \text { Company } X & 3.5 \% & \text { 3-month LBOR plus 10hp } \\\hline \text { Company } Y & 4.5 \% & \text { 3-month LBOR plus 30 bp } \\\hline\end{array}$
Suppose that Company X borrows fixed and company Y borrows floating.If they enter into a swap with each other where the apparent benefits are shared equally,what is company X's effective borrowing rate?

A) 3-month LIBOR-30bp
B) 3.1%
C) 3-month LIBOR-10bp
D) 3.3%