Which of the following statements is FALSE?
A) The swap contract - like forward and futures contracts - is typically structured as a 'zero-cost' security.
B) If short-term interest rates were to fall while long-term rates remained stable, then short-term securities would fall in value relative to long-term securities, despite their shorter duration.
C) An 'interest rate swap' is a contract entered into with a bank, much like a forward contract, in which the firm and the bank agree to exchange the coupons from two different types of loans.
D) In a standard interest rate swap, one party agrees to pay coupons based on a fixed interest rate in exchange for receiving coupons based on the prevailing market interest rate during each coupon period.
Correct Answer:
Verified
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