A Key Reason That Firms and Financial Institutions Might Participate

question 53

Multiple Choice

A key reason that firms and financial institutions might participate in an interest rate swap is

• A)to transfer interest rate risk to parties that are more willing to bear it.
• B)the low information costs of swaps compared with other derivative contracts.
• C)the greater liquidity of swaps compared with other derivative contracts.
• D)the favorable tax implications of swaps compared with other derivative contracts.

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