One Advantage of Using Swaps to Eliminate Interest-Rate Risk Is

question 40

Multiple Choice

One advantage of using swaps to eliminate interest-rate risk is that swaps

• A) are less costly than futures.
• B) are less costly than rearranging balance sheets.
• C) are more liquid than futures.
• D) have better accounting treatment than options.

Understand the value of civility and professional manners in the workplace.

Understand the concept and calculation of financial ratios and their implications on a company’s financial health.

Compute and interpret the current ratio to measure a company's liquidity.

Calculate and analyze the price-earnings ratio to evaluate a company’s share performance.

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Definitions:

Economic Decisions

Choices made by individuals, firms, or governments regarding the allocation of resources to optimize benefits.

Sunk Cost

A cost that has already been incurred and cannot be recovered. It should not impact future business decisions because it cannot be changed.

Depreciation

The reduction in the value of an asset over time, particularly regarding tangible assets like machinery and vehicles.

Outsourcing

The business practice of hiring a party outside a company to perform services or create goods that traditionally were performed in-house by the company's own employees.