Which of the following potentially transfers some interest rate risk to the lending syndicate?Group of answer choicesAn interest rate futures contractAn interest protection agreementThe issue of bonds to investment and pension fundsAn interest make-up agreementA forward rate agreement provided by a non-syndicate bank

Interest rate risk is the risk that arises for bond owners from fluctuating interest rates. How much interest rate risk a bond has depends on how sensitive its price is to interest rate changes in the market. The answer to your question is:

An interest rate futures contract

Here's why, step by step:

1. An interest rate futures contract: This is a financial derivative contract to buy or sell an interest-bearing instrument at a later date, at a price decided in the present. The buyer of the contract assumes the risk of rising interest rates, while the seller assumes the risk of falling interest rates. Therefore, if a lending syndicate enters into an interest rate futures contract, it potentially transfers some of its interest rate risk.

2. An interest protection agreement: This is a type of derivative contract where the buyer receives financial compensation for increases in interest rates. This does not transfer interest rate risk to the lending syndicate.

3. The issue of bonds to investment and pension funds: This is a way for companies to raise capital. It does not involve the transfer of interest rate risk to the lending syndicate.

4. An interest make-up agreement: This is a type of agreement where the borrower agrees to pay the lender any shortfall in interest payments. This does not transfer interest rate risk to the lending syndicate.

5. A forward rate agreement provided by a non-syndicate bank: This is a type of derivative contract where the buyer and seller agree on an interest rate for a future date. This does not transfer interest rate risk to the lending syndicate, especially if it's provided by a non-syndicate bank.