Consider a Fixed Notional Equity-For-Floating Rate Swap $x$ ,Where the Spread $x$

Consider a fixed notional equity-for-floating rate swap.The fair price of the swap is to exchange equity for Libor plus a spread $x$ ,where the spread $x$ is

A) Greater than zero if the Libor payer has a lower rating than the equity return payer.
B) Greater than zero if the equity return payer has a lower rating than the Libor payer.
C) Always less than zero because the Libor leg has lower volatility than the equity leg.
D) Zero regardless of credit rating considerations.

Correct Answer:

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