Which of the Following Is an Advantage of an Interest

question 42

Multiple Choice

Which of the following is an advantage of an interest rate swap agreement?

• A)Little or no basis risk
• B)Low brokerage fees
• C)Increased flexibility as compared to other hedging techniques
• D)Little or no credit risk
• E)All of the options are advantages of interest rate swap agreements.

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Definitions:

Net Cash

The balance of cash remaining once cash inflows and outflows have been accounted for during a specific period.

Financing Activities

Transactions involving raising capital and repaying investors, including issuing debt, obtaining loans, and returning capital to shareholders.

Net Cash

The amount of cash available after accounting for all cash inflows and outflows within a specific period.

Investing Activities

Financial actions related to the acquisition or sale of assets, such as securities and property, aimed at generating income or appreciation.