Which of the following statements about the swap transacted between Procter & Gamble (P&G) and Bankers Trust (BT) and the developments that followed is INCORRECT?
A) P&G underestimated the risk of large financial losses that could occur from a special "spread" term embedded in an otherwise innocuous looking fixed-for-floating interest rate swap.
B) Initially P&G had little chance of winning the lawsuit against BT because caveat emptor or "buyer beware" is a standard warning that applies to all economic activities.
C) P&G argued before the court that BT was criminally fraudulent in transacting the swap.
D) P&G alleged that BT did not properly disclose the swap's terms and risks and explain the potential costs of extricating itself from the swap.
E) BT suffered enormous damage to its reputation and was eventually acquired by the Deutsche Bank.
Correct Answer:
Verified
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