1. For the following problem(s), consider these debt strategies being considered by a corporate borrower. Each is intended to provide $1,000,000 in financing for a three-year period. Which strategy will result in the least amount of interest rate risk? Strategy #1: Borrow $1,000,000 for three years at a fixed rate of interest of 7%. Strategy #2: Borrow $1,000,000 for three years at a floating rate of LIBOR + 2%, to be reset annually. The current LIBOR rate is 3.50%

2. Referring to the strategies above, If your firm felt very confident that interest rates would fall or, at worst, remain at current levels, which Strategy would you choose?