Short-term rates slightly above long-term rates = mildly inverted yield curve.
A - This difference may reverse: Correct - the term structure can and does change over time.
B - Currency expected to strengthen long-term: Lower long-term rates imply lower expected long-term inflation, which is consistent with expectations of a stronger currency in the long run.
D - Interest rates are expected to fall: An inverted yield curve usually reflects market expectations that future short-term rates will be lower than today.
C is wrong because rates are not definite to fall, only expected to.
E is wrong: with short-term rates currently higher than long-term, a long-term borrower would not clearly
"save" by borrowing short and refinancing; it also adds refinancing risk.

The swap would be shown at fair value in the statement of financial position and the change in value posted to other comprehensive income.

EBIT = 5
Interest @5% on 10m = 0.5 # PBT = 4.5
Tax 20% = 0.9 # Earnings = 3.6
EPS = 3.6 / 10m = 0.36
Price = 3.60 # P/E = 10
Next year:
Interest @6% = 0.6 # PBT = 4.4
Tax 20% = 0.88 # Earnings = 3.52
EPS = 3.52 / 10m = 0.352
Expected P/E = 9.5 # price = 0.352 × 9.5 = 3.344 (# 3.34).
Drop = 3.60 # 3.34 = 0.26 # % drop = 0.26 / 3.60 # 7.2%.

A higher P/E ratio usually reflects higher expected future growth and/or lower perceived risk. Among the options, only higher expected growth explains why Company B's P/E (15) is greater than Company A's (8).
Higher risk or higher gearing would normally reduce the P/E, not increase it, and current profit level alone doesn't determine the multiple.