The principal in an interest rate swap is:
A. is not borrowed, lent, or exchanged. It just serves as the basis for the calculation of cash flows.
B. is usually held by a clearinghouse to guarantee payment.
C. always transferred from the originator to the counterparty of the swap.
D. usually borrowed from a third party.
Answer: A
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Which of the following is an administered interest rate set by commercial banks?
A) The discount rate B) The federal funds rate C) The prime rate D) The commercial paper rate
All mutually beneficial trades have taken place. This implies that
A) the production possibilities curve is bowed out. B) society is inside the production possibilities curve. C) economic efficiency prevails in the society. D) society is on the constant cost portion of its production possibilities curve.
Refer to the game between James and Theodore depicted in Figure 12.1. Which of the following is true?
A. If James chooses Up, Theodore's best response is to choose Right.
B. If James chooses Down, Theodore's best response is to choose Right.
C. If Theodore chooses Left, James's best response is to choose Up.
D. If Theodore chooses Right, James's best response is to choose Up.
Scarcity can be eliminated if:
a. people satisfy needs rather than wants. b. sufficient new resources were discovered. c. output of goods and services were increased. d. none of these.