An Interest Rate Swap Is Commonly Used by an Issuer

question 29

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:

Chromium

A chemical element with symbol Cr, known for its hardness, high corrosion resistance, and ability to be polished to a high shine, often used in plating.

SAE

Society of Automotive Engineers, an international organization that sets standards for engineering professionals in various industries.

Brittleness

A material property indicating how easily it breaks or cracks under stress without significant deformation.

Sulphur

A chemical element known for its yellow color and distinct smell, commonly used in fertilizers, industrial processes, and as a component of some fuels.