A Advantage of Using Swaps to Hedge Interest-Rate Risk Is

question 7

Multiple Choice

A advantage of using swaps to hedge interest-rate risk is that swaps

• A)are less costly than futures.
• B)can be written for long horizons.
• C)are not subject to default risk.
• D)are more liquid than futures.

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Definitions:

Output Producers

Businesses or individuals that create goods or services for consumption.

Aggregate Demand Curve

A graphical representation showing the total demand for goods and services within a particular economy at different price levels.

Goods and Services

The output of an economy that includes both physical products and intangible activities offered for consumption.

Coincident Economic Indicator

An economic statistic that changes at the same time as the economy or stock market, providing insight into the current state of economic activity.