TABLE 9.1 Use the Information for Polaris Corporation to Answer Following Question(s)

question 4

Multiple Choice

TABLE 9.1
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 to Table 9.1. 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:

Stakeholders

Individuals or groups that have an interest in any decision or activity of an organization.

Contribute

To give or supply in common with others, adding to a greater whole.

Rewards

Benefits, compensation, or recognition given in response to someone’s behavior, effort, or achievement as a means of encouragement.

Incentives

Rewards or motivators provided to encourage specific actions or behaviors in individuals or groups.