XCV can borrow at either 9.

Risk-free rate + 1.2%XCV should borrow where it has the comparative advantage (fixed) and then swap:XCV:Fixed: 9.5%Floating: rf + 1.3%BNM:Fixed: 10.5%Floating: rf + 2.1%XCV is better by 1.0% in fixed and 0.8% in floating, so the total potential gain from a swap:1.0%−0.8%=0.2%1.0\% - 0.8\% = 0.2\%1.0%−0.8%=0.2% They share this equally ⇒ each gets 0.1% benefit.XCV wants floating, so its effective rate should be:rf+1.3%−0.1%=rf+1.2%\text{rf} + 1.3\% - 0.1\% = \text{rf} + 1.2\%rf+1.3%−0.1%=rf+1.2%