Which of the Following Statements Is FALSE

question 8

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)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.
• C)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.
• D)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.

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Definitions:

Marginal Product

The additional output resulting from the use of one more unit of a variable input, holding all other inputs constant.

Production Possibilities

A curve that represents the maximum combination of goods or services that can be produced in a given period with available resources.

Marginal Product

The extra output generated from increasing a particular input by one unit, while all other inputs remain unchanged.

Customers Served

The number of consumers who purchase or are provided with a product or service by a business within a specific period.