Question

An entity determined that its variable interest rate on borrowing will increase significantly in the near future. Consequently, the entity hedged its variable by locking in a fixed rate for the relevant period. According to COSO, this decision is which type of response to risk?

Answer 1

Sharing

Step-by-step explanation:

COSO is non profit organisation. It has its head quarter at New York. COSO stands for Committee of Sponsoring Organizations of the Treadway Commission.

It is combined initiative to fight against corporate fraud.

Given : "An entity determined that its variable interest rate on borrowing will increase significantly in the near future. Consequently, the entity hedged its variable by locking in a fixed rate for the relevant period."

Now according to COSO, this decision is a type of 'sharing' response to risk.

Thus the answer is sharing.