Why Might an Individual or Organization Be Willing to Swap

question 72

Multiple Choice

Why might an individual or organization be willing to swap fixed-rate loans for floating-rate loans?

• A)They may perceive that interest rates are ready to increase
• B)Their cash flows may vary directly with interest rates
• C)Floating rates are lower than fixed rates
• D)They may be able to postpone the payment of principal

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Definitions:

Average Variable Cost (AVC)

Variable cost divided by output.

Average Total Cost

The total cost of production divided by the quantity produced, indicating the average cost per unit of output.

Average Variable Cost

Average variable cost (AVC) refers to the total variable costs per unit of output, covering expenses that change with the level of production, such as materials and labor.

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, resulting in a stable market condition.