In a Typical Quality Swap,a Borrower with a Positive Duration

question 30

True/False

In a typical quality swap,a borrower with a positive duration gap is more likely to pay all or part of the other swap party's long-term interest rate.

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Definitions:

Independent Director Control

A theory of corporate control that states that the best way to make certain that corporate decisions are made in the best interests of the corporation is to make sure that the decision makers themselves are not affected by the decisions.

Corporate Democracy

The system or practices within a corporation that allow for the participation and voting rights of shareholders in company decision-making processes.

Business Judgment Rule

A legal principle that protects the decisions of corporate directors and officers, made in good faith and with reasonable diligence, from being second-guessed by courts.

Fairness Rule

The rule that requires managers to be fair to the corporation when they personally benefit from their business decisions.