Q2. Unlike the situation with exchange rate risk, there is no uncertainty on the part of management for shareholder preferences regarding interest rate risk. Shareholders prefer than managers hedge interest rate risk rather than having shareholders diversify away such risk through portfolio diversification. a. true b. false Q3. As a management tool, a ________ is a rule, but a ________ is an objective. a. FIBOR; GIBOR b. policy; goal c. goal; policy d. None of the above. Q4. A U.S.-based firm with dollar denominated debt, but continuing sales denominated in Japanese yen, could a. purchase an interest rate cap agreement. b. purchase a series of rolling futures contracts to buy Japanese yen forward. c. enter into a swap agreement to swap dollar interest for Japanese interest payments. d. All of the above. Q5. Cross currency swaps typically have larger swings in total value than 'plain vanilla' interest rate swaps because a. interest rate swap agreements do not allow, contractually, large movements from par. b. interest rate movements are more volatile than currency movements. c. cross currency swaps exchange principal as well as interest payments. d. All of the above. Q6. A swap agreement may involve currencies or interest rates, but never both. a. true b. false