Which of the Following Statements About a Swap Instrument Is

question 3

True/False

Which of the following statements about a swap instrument is correct?
A. A company may seek to swap a short-term loan for a long-term loan (or vice versa). Another type of swap is where a company swaps a loan denominated in local currency for a foreign currency loan. After the swap agreement has been made, the primary borrower no longer has a commitment to the primary lender.
B. A company may seek to swap a fixed interest loan for a variable rate interest loan (or vice versa). Another type of swap is where a company swaps a loan denominated in local currency for a foreign currency loan. After the swap agreement has been made, the primary borrower still has a commitment to the primary lender should the other party to the swap default on the arrangement.
C. A company may seek to swap a compound interest loan for a simple interest rate loan (or vice versa). Another type of swap is where a company swaps a fixed interest rate loan for a variable interest rate loan (or vice versa). The swap agreement is enforceable by both parties and the risk of default by either party is minimal.
D. A company may seek to swap a short-term loan for a long-term loan (or vice versa). Another type of swap is where a company swaps a portion of its shares for the shares in another company. After the swap agreement has been made, the relationship between the two companies is stronger and can form the basis of an ongoing strategic alliance.
E. None of the given answers.

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Definitions:

Isolationists

Individuals or groups advocating for a policy of remaining apart from the affairs or interests of other groups, especially the political affairs of other countries.

Foreign Affairs

Matters concerning the relationships between countries, including diplomacy, trade agreements, and international conflicts.

Military Alliances

Agreements between two or more countries to support each other in case of war, providing mutual defense and strategic advantages.

Designated Group

Specific populations identified for affirmative action or diversity inclusion initiatives, often based on race, gender, disability, or other characteristics.