Interest Rate Swaps Can Be Used for All of the Following

question 2

Multiple Choice

Interest rate swaps can be used for all of the following purposes except:

• A)to borrow at the prime rate
• B)to convert a fixed-rate loan into a floating-rate loan
• C)to convert a floating-rate loan into a fixed-rate loan
• D)to speculate on interest rates
• E)to hedge interest rate risk

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Definitions:

Least-Cost Production

An economic principle where firms seek to produce their output at the minimum possible cost to maximize efficiency and profitability.

Inward Shift

A movement towards the origin of a supply or demand curve, indicating a decrease in supply or demand for a product.

Production Possibilities Curve

A graph representing the maximum combination of goods and services that can be produced with available resources and technology.

Emigration

The act of leaving one's own country to settle permanently in another.