Suppose you just signed a Purchase and Sale Agreem...
Suppose you just signed a Purchase and Sale Agreement on a new house and you have three choices based on the expectation of the variation of interest rates in the future: (1) Interest rates have been falling, so fixed-rate loans are now very attractive. You could lock in a fixed rate of 7% (annual percentage rate, APR) for 30 years (2) Interest rates are falling, so you are thinking about a 30-year variable-rate loan, which is currently at 4.5% and which is tied to the floating interest rates of Treasury bill (3) A variable-rate loan that begins at 5% and can increase by only as much as 2% per year up to a maximum of 11% If you wanted to hedge all risk of interest rate exposure, you should choose the plan of (), if you wanted to transfer risk through insuring, you should choose the plan of ().
A、(1); (2)
B、(1); (3)
C、(2); (3)
D、(1); (2) and (3)