Which of the Following Statements Is INCORRECT

question 10

Multiple Choice

Which of the following statements is INCORRECT?

• A) A swap is equivalent to a combination of forward rate agreements and zero-coupon bonds.
• B) Analogous to a yield curve for US Treasury securities,one can create a "swap curve" from bbalibor rates for Eurodollars and par swap rates.
• C) The primary difference between the Treasury yield curve and the swap curve is usually attributed to credit risk.
• D) As the swap curve is constructed from swap rates,which in turn are based on Treasury securities,it must be identical to the Treasury yield curve.
• E) Just as forward rates can be computed from coupon bond prices,they can also be computed from swap rates via an analogous procedure.

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Definitions:

Foreign Trading

The act of buying and selling of goods and services between countries, which is a fundamental aspect of global economies and influences political and economic relationships.

Manufacturing Process

The series of actions or steps taken to produce a finished product from raw materials.

Water Power

The use of water flow—either from tides, rivers, or waterfalls—to generate mechanical power or electricity, a sustainable and renewable energy source.

Waterways

Natural or man-made channels through which water flows, used for navigation, transportation, or irrigation.