TABLE 15.1 Use the Information for Polaris Corporation to Answer Following Question(s)

question 9

Multiple Choice

TABLE 15.1
Use the information for Polaris Corporation to answer following question(s) .
Polaris is taking out a $5,000,000 two-year loan at a variable rate of LIBOR plus 1.00%. The LIBOR rate will be reset each year at an agreed upon date. The current LIBOR rate is 4.00% per year. The loan has an upfront fee of 2.00%

-Refer Table 15.1. Polaris could have locked in the future interest rate payments by using

• A) a forward rate agreement.
• B) an interest rate future.
• C) an interest rate swap.
• D) any of the above.

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Definitions:

Color Constancy

The perceptual phenomenon in which the perceived color of objects remains relatively constant under varying illumination conditions.

Surrounding Objects

Items or structures that are located around a particular area or environment.

Low Levels

Refers to a minimal degree or intensity of a quality, quantity, or status.

Opposite Direction

A term indicating movement, action, or orientation in a direction that is reverse to another specified direction.