A Basis Swap Is Priced by Adding a Spread to the Higher

Multiple Choice

A basis swap is priced by adding a spread to the higher rate or subtracting a spread from the lower rate.This spread is found as

A) the difference between the floating rate on a plain vanilla swap based on one of the rates and the fixed rate on a plain vanilla swap based on the other rate.
B) the addition of the fixed rate on a plain vanilla swap based on one of the rates and the fixed rate on a plain vanilla swap based on the other rate.
C) the difference between the fixed rate on a plain vanilla swap based on one of the rates and the fixed rate on a plain vanilla swap based on the other rate.
D) the difference between the floating rate on a plain vanilla swap based on one of the rates and the floating rate on a plain vanilla swap based on the other rate.
E) none of the above correctly explain how this spread is found