Generally,which of the Following Is FALSE Regarding Interest Rate Risk

question 10

Multiple Choice

Generally,which of the following is FALSE regarding interest rate risk management techniques?

• A)Borrowers can protect themselves from upward movements in interest rates by using interest rate caps
• B)Borrowers can protect themselves from upward movements in interest rates by using interest rate futures contracts
• C)Borrowers can benefit from downward movements in interest rates by using interest rate caps
• D)Borrowers can benefit from downward movements in interest rates by using interest rate futures contracts

---

Definitions:

Amortization

The periodic transfer of the cost of an intangible asset to expense or of a bond discount to interest expense.

Prime Cost

The direct costs of manufacturing a product, which include the raw materials and direct labor expenses.

Plant Janitor's Wages

The wages paid to janitorial staff within a manufacturing plant, considered part of factory overhead costs.

Machine Operator Wages

Compensation paid to workers who operate machinery as part of the manufacturing process.