While an Interest Rate Swap May Be Nothing More Than

question 58

Multiple Choice

While an interest rate swap may be nothing more than a package of forward contracts, several important reasons suggest that it is not a redundant contract. Which of the below is NOT one of these?

• A) The longest maturity of forward or futures contracts does not extend out as far as that of an interest rate swap.
• B) An interest rate swap is a more transactionally efficient instrument.
• C) The liquidity of the interest rate swap market has grown since its beginning in 1981.
• D) Forward contract are a more transactionally efficient instrument since their beginning in 1955.

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