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key reason that firms and financial institutions might participate in an interest rate swap is A)...

key reason that firms and financial institutions might participate in an interest rate swap is

A) the low information costs of swaps compared with other derivative contracts.

B) to transfer interest rate risk to parties that are more willing to bear it.

C) the greater liquidity of swaps compared with other derivative contracts.

D) the favorable tax implications of swaps compared with other derivative contracts.

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Answer #1

The answer is option b

A key reason why firms and financial institutions might participate in an interest rate swap is to transfer interest rate risk to parties more willing to bear that risk. The low cost of the swaps information compared to other derivative contracts. Greater swap liquidity compared to other derivative contracts. Compared to other derivative contracts, the favorable tax implications of swaps If a bank wants to place a future wager on interest rates, the bank will

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