Which of the following derivatives is used to hedge against interest rate risk?
Options
ACall option
BPut option
CInterest rate swap
DForward contract
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Mutual Funds & DerivativesMCQQuestion 5769 of 6
All Questions Correct Answer
✅ Option C — Interest rate swap
All Options:
- ACall option
- BPut option
- CInterest rate swap ✓
- DForward contract
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Detailed Solution & Explanation
Interest rate swaps are a type of derivative that allows companies to manage interest rate risk. They involve exchanging a fixed interest rate for a floating interest rate, which can help to reduce the risk of changes in interest rates.
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