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A Firm with a Variable-Rate Loan Wants to Protect Itself

Question 11

Multiple Choice

A firm with a variable-rate loan wants to protect itself solely from increases in interest rates. Which one of the following would be of most interest to this firm?


A) Create an interest rate collar
B) Create an interest rate floor
C) Buy a put option on interest rates
D) Enter a currency futures contract
E) Buy a put option on a bond

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