Assume that Caterpillar's pays 3.25% per annum to its lenders for the next four years. Next, suppose that Caterpillar and UBS (a financial institution) enter the following four year interest rate swap: Catepillar receives X% per annum fixed from UBS and pays LIBOR to UBS. All payments are made annually. Catepillar's net interest paid after it enters the swap is LIBOR +0.20% per annum. In this case, Catepillar transforms___________ into___________ and X equals to________
a. Floating Rate Investment; Fixed Rate Investment; 3.45%
b. Fixed Rate Liability; Floating Rate Liability; 3.05%
c. Floating Rate Liability; Fixed Rate Liability; 3.25%
d. Fixed Rate Investment; Floating Rate Investment; 3.05%
e. Fixed Rate Liability; Floating Rate Liability; 3.45%