Using options to control interest-rate risk reduces the chance of a loss but increases the chance of a gain.

Name: Using options to control interest-rate risk reduces the chance of a loss but increases the chance of a gain.
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Question

Quizplus · Accepted Answer

Using options to control interest-rate risk is primarily aimed at reducing the chance of a loss due to interest rate fluctuations, but it typically involves a cost (the option premium), which can reduce potential gains.

Using Options to Control Interest-Rate Risk Reduces the Chance of a Loss