Multinational corporations are exposed to large interest rate risk because they finance themselves with fixed...
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Finance
Multinational corporations are exposed to large interest rate risk because they finance themselves with fixed and floating rate debt and they also earn interest in their cash assets.
Please mark the only instrument that multinationals DO NOT use to hedge their interest rate risk.
a. Swapping with a large international investment bank part of their floating interest rate exposure for fixed rate exposure or vice-versa.
b. Being long or short an interest rate future contract
c. A 6-12 FRA (forward rate agreement)
d. Always borrow in fixed interest rates to avoid having any exposure to interest rate risk
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