The Primary Risk in Swaps Is That

question 39

Multiple Choice

The primary risk in swaps is that:

• A) interest rates will not change.
• B) one of the parties will default.
• C) they are highly liquid and the market price will change.
• D) high U.S. government deficits will limit the availability of swaps.

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Definitions:

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Accounts Receivable Turnover

The relationship between net sales and accounts receivable, computed by dividing the net sales by the average net accounts receivable; measures how frequently during the year the accounts receivable are being converted to cash.

Receivable

An amount of money owed to a firm by its customers as a result of the firm extending credit to them.

Receivables

Money owed to a business by its clients or customers for products or services delivered but not yet paid for.