Mathematics · Financial Risk Management

Black Co is planning to issue debt and is considering interest rate derivatives to protect against rising interest rates. Which of the following statements are correct? 1. Interest rate options allow the buyer to take advantage of favorable interest rate movements. 2. A forward rate agreement does not allow a borrower to benefit from a decrease in interest rates. 3. Borrowers hedging against an interest rate increase will buy interest rate futures now and sell them at a later date.