Which of the Below Statements Is TRUE

question 21

Multiple Choice

Which of the below statements is TRUE?

• A) The position of a fixed-rate payer is equivalent to a long position in a fixed-rate bond and a short position in a floating-rate bond.
• B) The interest rate swap can allow each party to accomplish its asset/liability objective of locking in a spread.
• C) The interest rate swap does not permit financial institutions to alter the cash flow characteristics of their assets: from fixed to floating or from floating to fixed.
• D) By issuing securities in the Eurodollar bond market and using the interest rate swap, an entity cannot reduce its cost of issuing securities.

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Definitions:

Downward Slide

A situation of continuous decline or deterioration over a period of time.

Labor Market Segmentation Theory

A theory suggesting that the labor market is divided into separate segments, based on demographic, industry, or job characteristics, leading to disparities in work conditions and pay.

Primary And Secondary Labor Markets

The division of the labor market into two sectors: the primary with stable, well-paid jobs with benefits, and the secondary characterized by lower wages, less stability, and fewer benefits.

Social Barriers

Obstacles that prevent individuals or groups from interacting or accessing resources due to societal norms, prejudices, or practices.