Which of the Following Is the Limitations of the Swap

question 34

Multiple Choice

Which of the following is the limitations of the swap:

• A) there is a cost of time and resources associated with searching for a suitable swap candidate and negotiating the swap terms.
• B) each swap participant faces the risk that the counterparty could default on payments.
• C) A and B
• D) none of the above.

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Definitions:

Future Cash Flows

Estimates of the amount of money expected to flow in and out of the business in the future.

Book Value

The net value of a company's assets minus its liabilities, as recorded on the balance sheet.

Factored Receivables

Accounts receivable that have been sold to a third party (the factor) for immediate cash, minus a fee.

Cash Collections

The process of gathering all cash payments received from customers for goods or services provided.