The correct option to te question is:
Translation of the text.
Paco lives in Madrid, Spain. He works in front of Federico's office. They live in the same apartment.
Answer to the question.
As you can see in the text, it tells us that both Paco and Federico live in Spain, they work in offices that are opposite each other and that they also live together, which makes them "roommates," or what is the same, people who share an apartment, either to share the expenses, meet the rental requirements among others.
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