Financial Institutions Primarily Use Interest Rate Swaps in a Way

question 47

Multiple Choice

Financial institutions primarily use interest rate swaps in a way that will ____ exposure to interest rate risk and ____ potential returns.

• A)increase; increase
• B)increase; reduce
• C)reduce; increase
• D)reduce; reduce

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Definitions:

Bundle Pricing

A pricing strategy where multiple products or services are packaged together and sold at a single price, often lower than the total cost of buying them separately.

Tortilla Chip

A snack food made from corn tortillas cut into wedges and then fried or baked, commonly served with dips or used in dishes like nachos.

Product-line Pricing

A pricing strategy where different products within the same category are priced differently based on features, benefits, and cost of production.

Line Item Pricing

A pricing method where each individual item or service is priced separately rather than bundled together.