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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Definitions:

Unconscious Conflicts

Internal struggles, often stemming from childhood, that are not within an individual's conscious awareness but influence emotions and behavior, a concept rooted in psychoanalytic theory.

Extinction

In psychology, the gradual weakening and disappearance of a conditioned response, typically when the conditioned stimulus is no longer paired with the unconditioned stimulus.

Removal

The act of taking something away or off from the position occupied.

Disappearance

The act of someone going missing, either by intent or through unforeseen circumstances, leading to uncertainty about their whereabouts and well-being.