The Financial Manager of a Firm Has a Variable Rate

question 3

Multiple Choice

The financial manager of a firm has a variable rate loan outstanding. If she wishes to protect the firm against an unfavorable increase in interest rates she could:

• A) sell an interest rate futures contract of a similar maturity to the loan.
• B) buy an interest rate futures contract of a similar maturity to the loan.
• C) swap the adjustable rate loan for another of a different maturity.
• D) none of the above

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