iteracom

Shorting an floating rate bond means how much you pay each coupon is directly related to interest rates- higher interest rates, higher payments.

A) Buying an interest rate floor will not help as you're receiving money when rates are low- right when you're paying the least in interest. This effectively makes you win twice when rates are low.
B) Selling a floor sounds correct, but don't forget about the unipayment structure of options. In this case you'll receive a payment for option from the buyer regardless, but you'll end up paying them off when rates are low- i.e. hedging away the profit side of shorting the bond. When rates are high and you're paying more interest, you're not paying or receiving anything from the counterparty to the floor, except for the intial option premium. That makes this a poor hedge (does not reduce the downside risk of the position).
C) This is the correct answer. Eurodollar futures lock in a set price in the future. If you long a contract, it protects you from falling rates, therefore shorting a contract protects you from rising rates. Futures do not have a unipayment structure, so you can lose or gain on them, depending on the rate. Therefore you lose on the floating bond when rates increase, but you gain on the Eurodollar future.

In terms of caps/floors, the answer would be buying an interest rate cap. The key is that buying a cap and shorting a floor are NOT equivalent, just like buying a call/selling a put are not equivalent.