Which of the Below Statements Is FALSE

question 12

Multiple Choice

Which of the below statements is FALSE?

• A) A serious obstacle to accepting the credit arbitrage explanation of the swap market is that opportunities for credit arbitrage should be rare in reasonably efficient international credit markets.
• B) An argument suggested for the growth of the interest rate swap market is the increased volatility of interest rates that has led borrowers and lenders to hedge or manage their exposure.
• C) To reduce the risk of default, today's swap transactions require that the lower credit-rated entity obtain a guarantee from a highly rated commercial bank.
• D) To make money in the swaps market, intermediaries have to do a sufficient volume of business, which is possible only if they have (1) an extensive client base willing to use swaps, and (2) a large inventory of swaps.

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