Which of the following statements regarding interest rate swaps is incorrect?
A) The practice of marking-to market is carried out in the swaps market (similar to the futures market).
B) In contrast with a forward contract, the exact terms of exchange of a swap will change with interest rates.
C) The swap market is similar to the futures market in that if the market moves against the contract, a maintenance margin call is required.
D) The two parties in a swap generally have the same level of default risk.

Question

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The Answer of Which of the following statements regarding interest rate swaps is incorrect?
A) The practice of marking-to market is carried out in the swaps market (similar to the futures market).
B) In contrast with a forward contract, the exact terms of exchange of a swap will change with interest rates.
C) The swap market is similar to the futures market in that if the market moves against the contract, a maintenance margin call is required.
D) The two parties in a swap generally have the same level of default risk.

Which of the Following Statements Regarding Interest Rate Swaps Is