Swap Dealers

question 67

Multiple Choice

Swap dealers:

• A)charge an up-front fee for arranging a swap
• B)reduce the search costs of parties requiring swap transactions
• C)sell standardised, liquid swap contracts
• D)act as agents for swap parties, not as counterparties.
• E)All of these are correct.

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Definitions:

Marginal Cost

captures the cost added by producing one extra item of a product, emphasizing the concept of economies of scale and efficiency in production.

Marginal Product

An increase in output resulting from the use of one more unit of a particular input, holding all other inputs constant.

Opportunity Costs

The price paid when one skips the second-best option available in making a choice.

Economic Costs

The total costs of undertaking an economic activity, including both explicit costs and opportunity costs.