Which of the following statements is incorrect?
A) Interest rate swaps are sometimes used by financial institutions and other firms for speculative purposes.
B) A primary reason for the popularity of interest rate swaps is the existence of market imperfections.
C) Swaps are necessary for some financial institutions to obtain the maturities or rate sensitivities on funds that they desire.
D) Most financial institutions that anticipate that interest rate will move in an unfavorable direction to not hedge their positions.
Correct Answer:
Verified
Q3: Financial institutions with _ interest rate-sensitive liabilities
Q6: In a(n) _ swap, the fixed-rate payer
Q7: Assume a financial institution that has rate-sensitive
Q8: A _ swap involves the exchange of
Q10: Assume a U.S. savings institution funds its
Q11: In a swap arrangement, the most common
Q13: The option on a putable swap would
Q15: Savings institutions participate in the swap market
Q17: Assume a financial institution has rate-sensitive liabilities
Q19: A(n)_ swap allows the party making fixed-rate
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