Question: Consider a long $100m position in a 7y zero coupon bond. Which statement is true? a. You cannot hedge the interest rate exposure with an

Consider a long $100m position in a 7y zero coupon bond. Which statement is true?

a. You cannot hedge the interest rate exposure with an IRS as the bond does not pay any coupon

b. You can hedge the interest rate exposure with a 7-year IRS by paying fixed rate/receiving floating, on a notional exceeding $100m.

c. You can hedge the interest rate exposure with a 7-year IRS by receiving fixed rate/paying floating, on a notional exceeding $100m.

d. You can hedge the interest rate exposure with a 7-year IRS by receiving fixed rate/paying floating, on a notional lower than $100m.

e. You can hedge the interest rate exposure with a 7-year IRS by paying fixed rate/receiving floating, on a notional lower than $100m.

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