Why Were Inverse Floaters Developed

question 21

Multiple Choice

Why were inverse floaters developed?

• A)To exchange specified periodic cash flows in the future based on some underlying instrument.
• B)To better manage their interest rate, foreign exchange, and credit risks of corporate enterprises.
• C)To lower the cost of financing for government agencies.
• D)To determine payments and timing of payments when there is no standardized contract.
• E)To keep the swap market liquid by locating or matching counterparties.

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Definitions:

Opportunities

Situations or conditions that present possibilities for progress, advancement, or beneficial action.

Creativity

The ability to produce original and valuable ideas or solutions.

Social Identity Theory

A theory positing that individuals define themselves by the groups to which they belong or have an emotional attachment.

Personal Identity

The concept of self that evolves over time based on experiences and social interactions, encompassing personal characteristics, values, and beliefs that distinguish an individual.