An Interest Rate Swap Is Commonly Used by an Issuer

question 1

Multiple Choice

An interest rate swap is commonly used by an issuer of fixed-rate bonds to:

• A) convert to floating-rate debt.
• B) hedge exchange rate risk.
• C) lock in the interest payments on debt.
• D) remove the default risk of its debt.

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Definitions:

Target Marketing

The practice of directing advertising efforts to appeal to a specific segment of consumers based on shared characteristics such as demographics, geography, or behavior.

Entire Market

The entire market refers to the total available marketplace or the aggregate of all potential buyers and sellers for a given product or service.

Confidence

In statistics, it relates to the degree of certainty or reliability in an estimate or test result, often expressed as a confidence interval.

Monetary Error

A monetary error refers to inaccuracies or mistakes in financial transactions or accounting, which can impact financial statements or balances.