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A Firm with a Variable-Rate Loan Wants to Protect Itself

question 58

Multiple Choice

A firm with a variable-rate loan wants to protect itself from increases in interest rates.Which of the following would interest this firm?
I.interest rate floor
II.interest rate cap
III.put option on an interest rate
IV.call option on an interest rate


Definitions:

New Market

A new market refers to the introduction or discovery of new sectors, customer groups, or geographic areas where a business or product has not previously engaged or sold.

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