Leando Enterprises Has a Variable Rate Loan and Wants to Lock

question 10

Multiple Choice

Leando Enterprises has a variable rate loan and wants to lock in the rate so that the firm is in essence paying no more than 8.5% nor less than 7.5%. To do this, the firm needs to ____ a call and ____ a put option on interest rates.

• A) buy; buy
• B) buy; sell
• C) buy; ignore
• D) sell; buy
• E) sell; ignore

---

Definitions:

Mutual Interpersonal Expectations

The shared beliefs or standards regarding how individuals should behave towards each other in a social or professional context.

Universal Ethical Principles

Fundamental ethical concepts and values that are widely accepted across different cultures and societies as a basis for moral conduct.

Enlightened Egoism

A philosophical concept suggesting individuals should act in their own self-interest but also consider the long-term consequences of their actions on others, promoting mutual benefit.

Long-Term Self-Interest

The consideration of one's well-being in the future, leading to decisions that may sacrifice immediate gratification for future benefits.