Which of the Following Statements Is Incorrect

question 61

Multiple Choice

Which of the following statements is incorrect?

• A)Interest rate swaps are sometimes used by financial institutions and other firms for speculative purposes.
• B)A primary reason for the popularity of interest rate swaps is the existence of market imperfections.
• C)Swaps are necessary for some financial institutions to obtain the maturities or rate sensitivities on funds that they desire.
• D)Most financial institutions that anticipate that interest rate will move in an unfavorable direction to not hedge their positions.

---

Definitions:

Formic Acid

The simplest carboxylic acid, with the formula HCOOH, used industrially and as an antiseptic.

Ka

An equilibrium constant for the dissociation of a weak acid into its proton and conjugate base in solution; a measure of acid strength.

pKa

A measure of the acidity of a hydrogen atom in a molecule, indicating the tendency of the molecule to donate a proton.

Conjugate Acid

The species that is formed when a base gains a proton.