An investor with a fixed- rate investment who fears that interest rates might rise can use:
A) a paying floating/receiving fixed interest rate swap.
B) a paying floating/receiving floating interest rate swap.
C) a paying fixed/receiving floating interest rate swap.
D) a paying fixed/receiving fixed interest rate swap.

Question

Quizplus · Accepted Answer

By entering into a paying fixed/receiving floating interest rate swap, the investor can benefit from rising interest rates, as they will receive higher payments if rates increase, offsetting the fixed-rate investment.

An Investor with a Fixed- Rate Investment Who Fears That