Which of the Following Is a Typical Bid-Offer Spread on the Swap

question 5

Multiple Choice

Which of the following is a typical bid-offer spread on the swap rate for a plain vanilla interest rate swap?

• A)3 basis points
• B)8 basis points
• C)13 basis points
• D)18 basis points

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Definitions:

Gold Certificates

Certificates that were once issued by the United States government, representing a specific value of gold bullion held by the Treasury.

Trade Deficits

A situation where a country's imports exceed its exports, resulting in a negative balance of trade.

Current Account Deficits

A situation where a country spends more on foreign trade than it is earning and borrows capital from foreign sources to make up the difference.

International Gold Standard

A monetary system where the value of a country's currency or paper money was directly linked to gold.