How Can Companies Use Swaps to Change the Risk of Securities

question 58

Essay

How can companies use swaps to change the risk of securities they have issued?

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Definitions:

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, triggers a conditioned response.

Conditioned Response

A learned reaction to a conditioned stimulus that occurs because of previous conditioning.

Extinction

The diminishing of a conditioned response; occurs in classical conditioning when an unconditioned stimulus (US) does not follow a conditioned stimulus (CS).

Discrimination

Unfair or prejudicial treatment of people based on differences such as race, gender, age, or sexual orientation.