An Advantage of a Swap Over Futures and Options Is

question 23

Multiple Choice

An advantage of a swap over futures and options is that

• A)they can be written for long periods.
• B)they are more liquid.
• C)they carry less default risk.
• D)there is no need to assess the creditworthiness of participants.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed overhead—in the cost of a product.

Product Cost

Product cost refers to the total costs incurred to create a product, including direct labor, direct materials, and allocated overhead expenses, crucial for pricing and profitability analysis.

Unit Costs

The total expense incurred to produce, store, and sell one unit of a product or service.

Variable Costing

An accounting approach that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, excluding fixed overheads.