An advantage of a swap over futures and options is that
A) they can be written for long periods.
B) they are more liquid.
C) they carry less default risk.
D) there is no need to assess the creditworthiness of participants.
A
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________ is called an implicit cost, while ________ is called an explicit cost
A) A nonmonetary opportunity cost; a cost that involves spending money B) An accounting cost; an economic cost C) A production cost; a sales cost D) An actual cost; a hypothetical cost
Which of the following is not a common mistake made by consumers?
A) the failure to ignore sunk costs B) being overly pessimistic about their future behavior C) the failure to take into account the implicit costs of an activity D) being overly optimistic about their future behavior
Holding a group of assets reduces risk relative to holding a single asset as long as the assets
A) are dependent on each other. B) are positively correlated. C) are uncorrelated. D) do not have precisely the same pattern of returns.
Say a firm that sells its product at a price of $40 is using 20 units of capital. If the marginal product of the last unit of capital used was 50, and the constant rental rate of capital is $2,000, then this firm should
A. continue to use same units of capital. B. acquire more capital. C. decrease its output. D. decrease the amount of capital.