Company X Issues Variable-Rate Debt but Wishes to Fix Its

Multiple Choice

Company X issues variable-rate debt but wishes to fix its interest rates because it believes the variable rate may increase.Company Y has a fixed-rate bond but is looking for a variable-rate interest because it assumes the interest rates may decrease.The two companies agree to exchange cash flows.Such an arrangement is called:

A) a futures contract.
B) a forward contract.
C) a swap.
D) an option.