Which of the following is an advantage of having swap dealers?
A)They serve the function of taking the opposite side of each transaction in order to keep the swap market liquid.
B)They reduce the search costs of finding counterparties having mirror image financing requirement.
C)They generally guarantee swap payments over the life of the contract.
D)They incur any costs associated with the default by replacing the defaulting party on the same terms as the original swap.
E)All of the options.

Question

Quizplus · Accepted Answer

All of the options are advantages of having swap dealers. They provide liquidity to the market by taking the opposite side of each transaction, reducing search costs by finding counterparties with similar financing requirements, generally guaranteeing swap payments, and incurring costs associated with default by replacing the defaulting party on the same terms as the original swap.

Which of the Following Is an Advantage of Having Swap