Bank a Has a Funding Cost Of $L + 10$ Basis Points,where

Bank A has a funding cost of $L + 10$ basis points,where $L$ is Libor.Bank B has funding cost of $L + 80$ basis points.There is a reference obligation currently yielding $L + 140$ basis points.In a "Funding Cost Arbitrage," Bank A pays B the total return on the reference obligation in exchange for a payment of $L + x$ basis points by Bank B,where:

A) The value of $x$
Must lie between 10 and 60
B) The value of $x$
Must lie between 10 and 80
C) The value of $x$
Must lie between 60 and 140
D) The value of $x$
Must lie between 80 and 140

Correct Answer:

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