A firm entering into a currency or interest rate swap agreement is relieved of the ultimate responsibility for the timely servicing of its own debt obligations.

Question

Quizplus · Accepted Answer

While a currency or interest rate swap agreement can provide some form of protection or hedging against potential losses due to fluctuations in currency or interest rates, it does not relieve a firm of its ultimate responsibility to service its own debt obligations on a timely basis. The firm remains obligated to meet its own financial obligations, regardless of whether or not it has entered into a swap agreement.

A Firm Entering into a Currency or Interest Rate Swap