Which of the Following Regarding the Role of a Financial

question 40

Multiple Choice

Which of the following regarding the role of a financial intermediary in an interest rate swap is incorrect?

• A) Most swaps involve a financial intermediary as counterparty.
• B) The financial intermediary will most often seek to engage in an offsetting swap.
• C) The intermediary makes its profit by maintaining a spread between the rates offered to the two counterparties.
• D) The financial intermediary, by establishing a matched swap, ends up with a positive net exposure in the swap market.

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Definitions:

Collaborate

The act of working together with one or more people in order to achieve a common goal or complete a task.

Supportive

Providing encouragement, emotional help, or material assistance to others.

Engaged

Deeply involved in an activity or engaged in active participation.

Junk Food

Food items that are high in calories but low in nutritional value, often containing high levels of sugar, fat, or salt.