Which of the Below Statements Is FALSE

question 25

Multiple Choice

Which of the below statements is FALSE?

• A) The initial motivation for the interest rate swap market was borrower exploitation of what were perceived to be credit arbitrage opportunities.
• B) A borrower cannot benefit from issuing securities in the market in which it has a comparative advantage and then swapping obligations for the desired type of financing.
• C) Several observers have challenged the notion that credit arbitrage opportunities exist by arguing that the comparative advantage argument relies on assumptions of equilibrium in segmented markets.
• D) Those who challenge the credit arbitrage notion argue that the differences in quality spreads in the fixed-rate and floating-rate markets represent differences in the risks that lenders face in these two markets.

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Definitions:

Researching

The act of systematically investigating and studying materials and sources to establish facts and reach new conclusions.

Gatekeeper

An individual or entity that controls access to something or decides who gets access to resources or information.

Rambling Monologue

A lengthy, often tedious speech made by a single person, lacking a clear focus or endpoint, which can lead to listener disengagement.

Rating

An assessment or evaluation of something, typically in terms of quality, quantity, or some combination of factors.