Explain the potential strategy

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Suppose your firm invested in a callable bond recently when interest rates were high and the bond has three more years to go before the first call date. If interest rates are expected to fall over the next three years, which of the following is one potential strategy would take advantage of this view.

  • buy an interest rate floor
  • buy a receiver swaption
  • sell a receiver swaption
  • sell a payer swaption
  • buy a payer swaption

Reference no: EM133062658

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