Which of the Following Statements Is FALSE

question 22

Multiple Choice

Which of the following statements is FALSE?

• A)Corporations use interest rate swaps routinely to alter their exposure to interest rate fluctuations. Firms can use interest rate swaps with duration-hedging strategies.
• B)The value of a swap,while initially zero,will fluctuate over time as interest rates change.
• C)An interest rate that adjusts to current market conditions is called a floating rate.
• D)When interest rates rise,the swap's value will rise for the party receiving the fixed rate;conversely,it will fall for the party paying the fixed rate.

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Definitions:

Transferable

Capable of being passed from one entity to another, either through sale, gift, or by operation of law, thereby changing ownership or rights.

Supermajority Shareholder Voting

A voting requirement that exceeds the threshold of a simple majority, often used for significant decisions in a corporation.

Hostile Takeover

An attempt by a company or individual to acquire another company against the wishes of the target company's management and board of directors.

Voting Trust

An arrangement where the shares of a company's stock are placed under the control of a trustee, often to consolidate voting power or to make unified decisions on behalf of the shareholders.