Kit Question

In relation to the use of derivatives by Peony Co, which of the following statements is correct? A Interest rate options must be exercised on their expiry date, if they have not been exercised before then B Peony Co can hedge interest rate risk on borrowing by selling interest rate futures now and buying them back in the future C An interest rate swap is an agreement to exchange both principal and interest rate payments D Peony Co can hedge interest rate risk on borrowing by buying a floor and selling a cap Correct Answer is B. I did D. I was not able to understand why D is wrong and B is correct.