Company X and Company Y Have Mirror-Image Financing Needs (They

question 77

Multiple Choice

Company X and company Y have mirror-image financing needs (they both want to borrow equivalent amounts for the same amount of time. Company X has a AAA credit rating, but company Y's credit standing is considerably lower.

• A)Company X should demand most of the QSD in any swap with Y as compensation for default risk.
• B)Since Y has a poor credit rating, it would not be a participant in the swap market.
• C)Company X should more readily agree to a swap involving Y if there is also a swap bank providing credit risk intermediation.
• D)both a and c

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Definitions:

Sociocultural Cognitive Theory

A theory that emphasizes the impact of social interaction, culture, and language on cognitive development.

Cognitive Development

Cognitive Development is the study of how thinking, problem solving, and intelligence evolve from childhood to adulthood.

Piaget's Theory

A theory of cognitive development that describes how children develop logical thinking from infancy through adolescence through a series of stages.

Culture

The shared beliefs, practices, norms, and values of a group of people that are passed down from generation to generation.