Suppose a company wants to borrow \(\$ 100\) million for five years at a fixed-rate. Suppose the company can issue both a five-year, \(6 \%\), fixed-rate bond paying coupons on a semiannual basis and a five-year FRN paying LIBOR plus \(100 \mathrm{BP}\).

a. Explain how the company could create a synthetic five-year fixed-rate loan with a swap.

b. What would the fixed rate on the swap have to be for the synthetic position to be equivalent to the direct loan position?

c. Define the company's criterion for selecting the synthetic loan.