A key motive for companies and financial institutions to participate in an interest rate swap is:

Question

Quizplus · Accepted Answer

Companies and financial institutions typically enter into interest rate swaps to transfer interest-rate risk to parties who are more willing to bear it. This helps them to manage their exposure to interest rate fluctuations and to reduce their overall financial risk. The other options (A, C, and D) are not typically the key motives for participating in interest rate swaps.

A Key Motive for Companies and Financial Institutions to Participate