Firm A can borrow at $2\%$ fixed or at Libor minus $50$ bps in the fixed and floating rate markets, respectively. Firm B can borrow at $5\%$ fixed or Libor flat in the fixed and floating rate markets, respectively. A wants to borrow floating and B wants to borrow fixed.

If A borrows fixed and B borrows floating and they enter into a fixed$-$for$-$Libor interest$-$rate swap in which A pays Libor flat, what is the range of fixed rates for B that enables each firm to improve its financing costs $($compared to accessing financing in the market directly$)?$

Question $6$ options:

$2\mathrm{.}5\%-4\mathrm{.}5\%$

$2\%-5\%$

$1\mathrm{.}5\%-4\mathrm{.}5\%$

$2\mathrm{.}5\%-5\%$