Which of the Following Statements Is FALSE

question 8

Multiple Choice

Which of the following statements is FALSE?

• A)The swap contract-like forward and futures contracts-is typically structured as a "zero-cost" security.
• B)An interest rate swap is a contract entered into with a bank,much like a forward contract,in which the firm and the bank agree to exchange the coupons from two different types of loans.
• C)In a standard interest rate swap,one party agrees to pay coupons based on a fixed interest rate in exchange for receiving coupons based on the prevailing market interest rate during each coupon period.
• D)If short-term interest rates were to fall while long-term rates remained stable,then short-term securities would fall in value relative to long-term securities,despite their shorter duration.

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Definitions:

Normal Distribution

A balanced probability distribution centered around the mean, where data closer to the mean are seen more frequently than data considerably far from the mean.

Area

The extent or measurement of a surface or piece of land, typically measured in square units.

F Distribution

A probability distribution used in statistics, especially in analysis of variance (ANOVA), to determine the variance among sample means.

Parameters

In statistics, parameters are numerical characteristics that describe and summarize features of a population.