In Which of the Following Situations Would the Swap Dealer

question 126

Multiple Choice

In which of the following situations would the swap dealer make a profit of 3 basis points?

• A) The dealer receives a fixed rate of 9% from counterparty A but pays a fixed rate of 8.3% to counterparty B
• B) The dealer receives a fixed rate of 9% from counterparty A but pays a fixed rate of 6% to counterparty B
• C) The dealer receives a fixed rate of 9% from counterparty A but pays a fixed rate of 8.97% to counterparty B
• D) The dealer receives a fixed rate of 9% from counterparty A but pays a fixed rate of 8.7% to counterparty B

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Definitions:

Authority Decisions

relate to choices or judgments made by individuals or bodies holding power or command within an organization.

Manager

An individual responsible for directing, controlling, and administering an organization or group, overseeing tasks, and making decisions.

Confirmation Error

The tendency to seek confirmation for what is already thought to be true and not search for disconfirming information.

Selective Perception

The tendency to define problems from one’s own point of view.