A Swap Is a Method Used to Reduce Financial Risk

question 10

Multiple Choice

A swap is a method used to reduce financial risk.Which statement about swaps is NOT correct?

• A)A swap involves the exchange of cash payment obligations.
• B)The earliest swaps were currency swaps, in which companies traded debt denominated in different currencies, say, dollars and pounds.
• C)Swaps are very often arranged by a financial intermediary, which may or may not take the position of one of the counterparties.
• D)A problem with swaps is the short maturities, which has prevented the development of a secondary market.

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Definitions:

Norm Of Reciprocity

A principle suggesting that individuals respond to kindness or positive actions with similar behaviors, fostering cooperative relationships.

Given Back

The act of returning something to its original place or to a person who initially provided it, often used in the context of donations or contributions.

Prototypical Followship

The characteristics, behaviors, and actions that are typically associated with being a follower or subordinate in a leadership dynamic.

Preconceived Notions

Ideas or beliefs formed without enough evidence or experience.