Suppose Your Firm Issued a Callable Bond Two Years Ago

Multiple Choice

Suppose your firm issued a callable bond two years ago and it has three more years to go before the first call date.If interest rates have fallen over the past two years and you believe rates will not stay this low and that it would be in the firm's best interest to lengthen the duration of the liabilities,which of the following is one potential strategy to accomplish the objective of lengthening the duration while also securing the lowering interest rate.

A) buy a payer swaption
B) sell a payer swaption
C) buy a receiver swaption
D) sell a receiver swaption
E) buy an interest rate floor