Which of the Following Statements Is False

question 42

Multiple Choice

Which of the following statements is false?

• A) The swap contract-like forward and futures contracts-is typically structured as a "zero-cost" security.
• B) An interest rate swap is a contract entered into with a bank, much like a forward contract, in which the firm and the bank agree to exchange the coupons from two different types of loans.
• C) In a standard interest rate swap, one party agrees to pay coupons based on a fixed interest rate in exchange for receiving coupons based on the prevailing market interest rate during each coupon period.
• D) If short-term interest rates were to fall while long-term rates remained stable, then short-term securities would fall in value relative to long-term securities, despite their shorter duration.