In Regards to an Interest Rate / Equity Swap, Which

question 39

Multiple Choice

In regards to an interest rate / equity swap, which of the below statements is TRUE?

• A) These swaps cannot be used by investment bankers to create a security.
• B) Debt instruments created by using swaps are not commonly referred to as structured notes.
• C) Debt instruments created by using swaps are commonly referred to as structured notes.
• D) None of these

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Definitions:

Junk Bonds

High-yield bonds with a lower credit rating than investment-grade bonds, reflecting a higher risk of default.

Industrial-Development Bond

A government-issued bond to support the development of industrial projects, often tax-exempt for the buyer.

Revenue Bond

A type of municipal bond supported by the revenue from a specific project or source, rather than general tax revenues.

General-Obligation Bond

A type of municipal bond that is secured by the full faith and credit of the issuing government, including its taxing power to repay the bondholders.