A Floating-Rate Lender Wants to Use a Collar as a Hedge

question 1

Multiple Choice

A floating-rate lender wants to use a collar as a hedge. Which of the following is appropriate?

• A) Buy a cap and sell a floor
• B) Buy a cap and buy a floor
• C) Sell a cap and sell a floor
• D) Sell a cap and buy a floor

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Definitions:

Sensory Stimuli

Refers to any external or internal event or factor that can be perceived by the senses and elicit a response.

Nerve Endings

The terminal parts of nerve cells that make synaptic connections with other nerve cells, muscles, or glands.

Nervous System

An extensive network of specialized cells that communicate information about an organism's environment and its own body in order to regulate its functions.

Sensory Adaptation

The process by which sensory receptors become less sensitive to constant or unchanging stimuli over time, allowing individuals to focus on changes in their environment.