Kizspy | Question: 31
(Choose 1 answer)
A savings and loan association has long-term fixed rate mortgages supported by short-term funds. A put
option on Treasury bond futures could be used to (ignore the premium paid for the option when you answer
this question)
A. maintain its interest rate spread if interest rates rise, and increase its spread if interest rates fall.
B. maintain its interest rate spread if interest rates fall, and increase its spread if interest rates rise.
C. maintain its interest rate spread whether interest rates rise or fall.
D. increase its interest rate spread whether interest rates rise or fall
