The primary risk in swaps is that:
A. high U.S. government deficits will limit the availability of swaps.
B. they are highly liquid and the market price will change.
C. interest rates will not change.
D. one of the parties will default.
Answer: D
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In a Stackelberg game, a monopolist could deter entry from a potential rival by
A) telling the potential rival not to enter. B) strategically moving first. C) moving to a Bertrand model. D) None of the above.
If you were a borrower, which of the following unexpected changes in inflation would you prefer once you have taken out a long term fixed rate loan?
a. An increase from 2% inflation to 6% inflation. b. An increase from 7% inflation to 10% inflation. c. A decrease from 14% inflation to 8% inflation. d. A decrease from 6% inflation to 3%.
Which retail operation would have the highest costs per book sold?
A. A small independent bookstore B. A large retail bookstore chain C. An Internet seller of books D. The Internet seller and retailer
Suppose that the market for labor is initially in equilibrium. A decrease in the price of output will cause the equilibrium wage
a. and the equilibrium quantity of labor to rise. b. and the equilibrium quantity of labor to fall. c. to rise and the equilibrium quantity of labor to fall. d. to fall and the equilibrium quantity of labor to rise.