A Firm Is Involved in an Agreement Whereby It Makes

question 48

Multiple Choice

A firm is involved in an agreement whereby it makes payments in periods when a market interest rate rises above an interest rate level specified in the agreement. This means that the firm has

• A)purchased an interest rate cap.
• B)sold an interest rate cap.
• C)purchased an interest rate floor.
• D)sold an interest rate floor.

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Definitions:

Inverse Time-Delay

A characteristic of certain protective devices where the time taken to interrupt the current decreases as the magnitude of the fault current increases.

Melting Alloy

A mixture of two or more metals melted together to create a new material with specific desirable properties.

Bimetallic

Pertaining to an object made of two different metals bonded together, often used in temperature sensing applications.

Motor Starter

An electrical device that controls the use of electrical power to equipment, usually an electric motor, by initiating the stop/start command.