1. In what ways can financial futures help financial service firms deal with interest rate risk?

Select one:

A. Reducing risk exposure from unexpected price changes.

B. By allowing borrower and lender share interest rate risk.

C. Rising interest rates generally for a short period of time.

D. None of the options is correct.

E. Calculate net rate of return from the loan made.

2. Which of the following does not relate to the purpose of interest rate swaps?

Select one:

A. can convert from fixed to floating interest rates or from floating to fixed interest rates.

B. Only the net amount of interest due usually flows to one or the other party to the swap.

C. Protects its holder against rising market interest rates.

D. None of the options is correct.

E. is a way to change a borrowing institutions exposure to interest-rate fluctuations.

3.Two banks agree to swap portions of their customers loan repayments so that they do not have to rely on one narrow market area. It is known as

Select one:

A. a credit option.

B. a credit swap.

C. None of the options is correct.

D. a standby letter of credit.

E. a credit linked note