1) An interest rate cap:

A)	obligates both parties to trade at a preset price at a future date

B)	gives one party the right to buy an underlying good in the future at a preset price

C)	gives one party the right to sell an underlying good in the future at a preset price

D)	sets the maximum interest rate paid/received

E)	none of the above

2) The buyer of a put option agrees to:

A)	buy the underlying good at a preset price at a future date

B)	sell the underlying good at a preset price at a future date

C)	decide later whether to buy the underlying good at a preset price at a future date

D)	decide later whether to sell the underlying good at a preset price at a future date

E)	none of the above

3)The seller of a call option obligates themselves to:

A)	buy the underlying good at a preset price at a future date

B)	sell the underlying good at a preset price at a future date

C)	decide later whether to buy the underlying good at a preset price at a future date

D)	decide later whether to sell the underlying good at a preset price at a future date

E)	none of the above

4) A bank has long-term fixed rate loans that are funded with short-term CDs. Which of the following transactions could lower the banks interest rate risk?

A)	enter an interest rate swap contract where the bank receives a short-term variable rate and the bank pays a fixed-rate of interest

B)	enter an interest rate swap contract where the bank pays a short-term variable rate and receives a fixed-rate of interest

C)	make more long-term fixed rate loans and fund them with short-term CDs

D)	all of the above

E)	none of the above