Briefly describe the following types of derivative securities: (1) futures and forward contracts, (2) swaps, (3) structured notes and CMOs, and (4) inverse floaters.

Messman Corporation issues fixed-rate debt at a rate of 9.00%. Messman agrees to an interest rate swap in which it pays LIBOR to Moore Inc. and Moore pays 8.75% to Messman. What is Messman’s resulting net payment? (LIBOR + 0.25%)