Consider a non$-$financial firm $($such as$,$ Heinz$).$ Its majority liabilities are floating rate loans. What is the nature of the

interest rate risk that this firm faces? How can the firm hedge this risk using an interest rate swap?

$$ Interest rates may go up$,$ in which case the amount of interest payments rises. The firm may exchange its floating rate liability to a

fixed rate based liability.

$$ The floating rate liability may be too long to mature even when the prevailing rates go down. The firm may exchange its floating rate

liability to a short$-$term floating rate based liability.

$$ The volatility of Interest rates may go up$,$ in which case the amount of interest payments rises. The firm may exchange its floating rate

liability to a shorter$-$term floating rate based liability.

$$ The floating rate liability may end soon, which lead to refinancing risk. The firm may exchange its floating rate liability to a long$-$term

floating rate based liability.