Which of the Following Statements Is Incorrect

question 7

Multiple Choice

Which of the following statements is incorrect?

• A)Interest rate swaps are sometimes used by financial institutions and other firms for speculative purposes.
• B)A primary reason for the popularity of interest rate swaps is the existence of market imperfections.
• C)Swaps are necessary for some financial institutions to obtain the maturities or rate sensitivities on funds that they desire.
• D)Most financial institutions that anticipate that interest rates will move in an unfavorable direction do not hedge their positions.

---

Definitions:

Indirect Strategy

An approach to communication where relevant background information and explanations are provided before delivering the main message, often used to soften bad news or persuade.

Background Information

This term describes the essential context or previous data about a topic, necessary for understanding the current situation or analysis.

Indirect Strategy

A communication approach that presents the main point or conclusion after the provision of supportive evidence or arguments.

Sensitive Messages

Communications that require careful handling due to the potential for impacting the recipient emotionally or generating controversy.