One Advantage of Using Swaps to Eliminate Interest-Rate Risk Is

question 40

Multiple Choice

One advantage of using swaps to eliminate interest-rate risk is that swaps

• A) are less costly than futures.
• B) are less costly than rearranging balance sheets.
• C) are more liquid than futures.
• D) have better accounting treatment than options.

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Definitions:

Void Bargains

Agreements that have no legal force or effect from the outset due to a fundamental defect or illegality.

Illegal Contracts

Agreements that are not enforceable by law because they involve activities that are illegal.

Interference with Contractual Relations

Interference with Contractual Relations involves intentionally causing a party to a contract to fail to fulfill their obligations, harming the contractual relationship.

Plaintiff

The party who initiates a lawsuit in civil court against a defendant to seek remedy or damages.