Which of the Following Statements About Municipal Swaps Is INCORRECT

question 16

Multiple Choice

Which of the following statements about municipal swaps is INCORRECT?

• A) A municipal swap has a state,local,or municipal government as counterparty.
• B) Municipal swaps are often sold through auctions.
• C) Many government entities use swaps and other derivatives for managing their cash flows.
• D) Due to privacy concerns,governments rely on regular employees for designing and executing swaps and rarely seek outside help.
• E) Municipal swaps face counterparty risk,basis risk,termination risk,rollover risk,and amortization risk.

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Definitions:

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management.

Financial Statements

The comprehensive reports that summarize a company's financial performance, position, and cash flows over a specific period.

Current Ratio

An assessment tool that determines an enterprise's capability to settle short-term due debts by dividing its immediate assets by its immediate liabilities.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time, offering a snapshot of its financial position.