Question: Borrowers with floating rate loans often struggle to make payments when interest rates rise. A bank owns a loan that they are concerned about defaulting.

Borrowers with floating rate loans often struggle to make payments when interest rates rise. A bank owns a loan that they are concerned about defaulting. Which of the following would protect the bank and make a payment to the bank in the event of a default?

A. CDS
B. Futures contract
C. Option contract
D. Interest rate swap

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