Large fluctuations in interest rates:
A) have led to substantial capital gains and losses for owners of securities.
B) have increased the need for companies to manage their interest-rate exposure.
C) increase the demand for derivative products.
D) mean all of the given choices are correct.

Question

Quizplus · Accepted Answer

All of the given choices are correct. Large fluctuations in interest rates have significant impacts on securities, companies, and derivative markets. Owners of securities can experience substantial capital gains and losses during periods of high interest rates. Therefore, companies need to manage their interest-rate exposure, and derivative products' demand increases as a hedging tool against such changes.

Large Fluctuations in Interest Rates