Which of the following is used to hedge against the risk of interest rate movements?

Hedging against interest rate movements is crucial for businesses and investors who seek to protect their financial positions from fluctuations in interest rates. Each of the provided options—interest rate collar, interest rate futures, and interest rate options—serves as a method to mitigate this type of risk, thereby reinforcing the validity of selecting all of them as the correct answer.

An interest rate collar is a strategy that involves using both a cap and a floor to limit the range of possible interest rates. This allows a company to protect itself from rising interest rates (through the cap) while still benefiting from falling rates (through the floor), effectively managing risk within a predefined range.

Interest rate futures are standardized contracts that allow parties to agree on the future interest rates today. Participants can either lock in these rates for future borrowing or lending, providing a mechanism to offset potential losses due to unfavorable interest rate movements.

Interest rate options give the holder the right, but not the obligation, to enter into an interest rate transaction at a set rate before a specific date. This flexibility helps parties hedge against movements in interest rates effectively, as they can choose whether or not to exercise the option based on favorable or unfavorable rate changes.

By combining all these instruments, one can create a comprehensive hedging