24-33 What Is the Basic Reason That Two Counterparties Enter

question 51

Multiple Choice

24-33 What is the basic reason that two counterparties enter into a swap agreement?

• A)Exchange of one specified cash flow in the future based on some underlying index.
• B)Better management of credit risk by using a fixed or floating rate bond as hedging instrument.
• C)To restructure or off-set the expected future cash flows to be collected from assets or liabilities held on the balance sheet.
• D)Exchange of assets for a specific period of time at a specified interval.
• E)Taking the opposite side of each transaction in order to keep the swap market liquid.