Which of the Following Is Not True About Interest Rate

question 81

Multiple Choice

Which of the following is not true about interest rate swaps?

• A) Payments are based on a notional principal.
• B) Floating rate payers profit if interest rates fall.
• C) Payments can be quarterly as well as semi-annually.
• D) Parities exchange debt obligations.
• E) Default risk is a possibility in the swaps market.

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Definitions:

Marginal Cost (MC)

Marginal Cost, abbreviated as MC, refers to the increase in total production cost that arises from producing an additional unit of output, emphasizing the concept of optimizing production levels.

Average Total Cost (ATC)

The total cost divided by the quantity of output produced, representing the per-unit cost of production.

Marginal Revenue (MR)

The additional financial gain a firm secures by selling one more unit of its product or service.

Purely Competitive

A market structure characterized by a large number of small firms, a homogeneous product, free entry and exit, and complete information, leading to price taking behavior.