A type of financial derivative that would allow a firm to hedge against changes in interest rates over a 5-year period is a ____.
A)interest rate futures contract
B)commodity soup
C)interest rate swap
D)interest rate put option

Question

Quizplus · Accepted Answer

An interest rate swap is a financial derivative that allows firms to hedge against changes in interest rates over a specific period. In this case, a 5-year interest rate swap would be appropriate. Interest rate futures contract and interest rate put options are also related to hedging against interest rate changes, but they may not have the same time period or specific terms required for the firm's needs. Commodity soup is not a financial derivative and is not related to hedging against interest rate changes.

A Type of Financial Derivative That Would Allow a Firm