You Have Entered into a Swap Where You Receive the Fixed

question 22

Multiple Choice

You have entered into a swap where you receive the fixed rate and pay the floating rate. What is the best way to hedge interest-rate risk in this swap from among the following choices?

• A) Add a long position in fixed rate bonds.
• B) Add a short position in interest-rate futures.
• C) Add a basis (i.e., floating-floating) swap.
• D) Add a short position in FRAs.