A Type of Financial Derivative That Would Allow a Firm

question 28

Multiple Choice

A type of financial derivative that would allow a firm to hedge against changes in interest rates over a 5-year period is a ____.

• A)interest rate futures contract
• B)commodity soup
• C)interest rate swap
• D)interest rate put option

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Definitions:

Cash Flow Statement

A cash flow statement is a financial document that provides aggregate data regarding all cash inflows and outflows a company receives from its operating, investing, and financing activities.

Noncash Assets

Assets owned by a company that are not in the form of cash or cash equivalents, including property, plant, equipment, and intellectual property.

Δ Stockholders' Equity

The change in the total value of a company's equity over a specific period, influenced by earnings, dividends, and stock issues.

Financing Activities

Transactions and events where a company generates or repays capital to finance its operations.