There is a trade- off between achieving the lowest possible average cost of borrowing and obtaining certainty about these costs. One of the advantages of derivative instruments is that they can be used to improve the terms of this trade- off.

Question

Quizplus · Accepted Answer

Derivative instruments can be used to hedge against interest rate fluctuations, providing certainty about borrowing costs while potentially lowering the average cost through strategic financial management.

There Is a Trade- Off Between Achieving the Lowest Possible