KKR Issues a $10 Million 18-Month Floating Rate Note Priced

question 106

Multiple Choice

KKR issues a $10 million 18-month floating rate note priced at LIBOR plus 400 basis points.What is KKR's interest rate risk exposure and how can it be hedged?

• A)KKR is exposed to interest rate increases; short hedge by buying put options.
• B)KKR is exposed to interest rate increases; long hedge by buying call options.
• C)KKR is exposed to interest rate decreases; long hedge by buying call options.
• D)KKR is exposed to interest rate decreases; short hedge by buying put options.
• E)KKR is exposed to interest rate increases; short hedge by buying call options.

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Definitions:

Sedentary Lifestyle

A way of life that involves little physical activity, often associated with sitting or lying down for most of the day.

Longevity

The length of time that an individual lives or a thing lasts.

Coronary Artery Disease

A condition characterized by the narrowing or blockage of the coronary arteries, leading to a reduced blood flow to the heart muscle and potentially causing heart attacks.

Modifiable Risk Factor

A risk factor for disease or injury that can be reduced or controlled through changes in behavior or environmental exposure.