Which of the Following Statements Is True

question 11

Multiple Choice

Which of the following statements is true?

• A)Total return swaps are typically structured in a way that any capital gains or losses are paid at the end of the swap and alternative arrangements do not exist.
• B)Total return swaps are typically structured in a way that any capital gains or losses are paid at the end of the swap, but alternative arrangements exist.
• C)Pure credit swaps are typically structured in a way that any capital gains or losses are paid at the end of the swap and alternative arrangements do not exist.
• D)Pure credit swaps are typically structured in a way that any capital gains or losses are paid at the end of the swap, but alternative arrangements exist.

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Definitions:

Marginal Propensity

The ratio of change in an economic variable (e.g., consumption, saving) to a change in another economic variable (e.g., income).

Disposable Income

Post-tax income that households can allocate towards savings and expenses.

Consumption Spending

The total amount of money that households spend on goods and services within a certain period.

Disposable Income

Income available to households for saving and expenditure post-income tax deductions.