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Your firm plans to borrow 10M for 1 year in 6 months time and is concerned about interest rate risk. What derivative position should you take to
Your firm plans to borrow 10M for 1 year in 6 months time and is concerned about interest rate
risk. What derivative position should you take to hedge the risk?
A. A position that makes money if 1‐year rate goes up in 6 months' time, OR
B. A position that makes money if 1‐year rate goes down in 6 months' time.
Your firm plans to lend 10M for 1 year in 6 months time and is concerned about interest rate
risk. What derivative position should you take to hedge the risk?
A. A position that makes money if 1‐year rate goes up in 6 months' time, OR
B. A position that makes money if 1‐year rate goes down in 6 months' time.
