When an Interest-Rate Swap Is Used to Hedge a Financial

Multiple Choice

When an interest-rate swap is used to hedge a financial risk on a company's balance sheet, thecompany will have

A) a short-term liability and a short-term asset with fixed values even if interest rates vary
B) a short-term liability and a long-term asset with offsetting changes in value when interest rates vary
C) a long-term liability and a short-term asset with fixed values even if interest rates vary
D) a long-term liability and a long-term asset with offsetting changes in value when interest rates vary