Financial Swaps MCQ Multiple Choice Questions Answers for Practice
1. A back-to-back loan usually involves ...............companies in ..........different countries.
Correct Answer is: two, two
2. A currency swap bank is usually
Correct Answer is: a financial intermediary
3. A currency swap broker is a swap bank who
Correct Answer is: is strictly an agent to take orders from her client
4. An interest rate floor in currency swaps sets
Correct Answer is: a minimum rate on floating interest rate payments
5. Call swaptions are attractive when interests are expected to
Correct Answer is: rise
6. Comparative advantages usually exist because
Correct Answer is: market imperfections.
7. Currency swaps involve
Correct Answer is: two currencies
8. Currency swaps overcome the shortcomings of parallel and back-to-back loans because of
Correct Answer is: specialized swap dealers and brokers
9. Financial swap markets have emerged in recent years because of the following reasons
Correct Answer is: all of the above
10. Financial swaps are used by the following organizations
Correct Answer is: all of the above
11. Interest rate swaps are usually possible because international financial markets in different countries are
Correct Answer is: imperfect
12. Interest rate swaps involve counterparties who want to
Correct Answer is: exchange a floating rate commitment for a fixed rate loan
13. Mortgage companies may use interest rate swaps mainly because
Correct Answer is: they have short-term liabilities and long-term assets
14. Parallel and back to back loans attained prominence in the 1970s when
Correct Answer is: the British government imposed taxes on foreign currency transactions
15. Proper risk management involves a three-stage process. Which of the following is one of those stages
Correct Answer is: identify where the risks lie
16. The amount of outstanding interest rate swaps is ..............than that of outstanding currency swaps.
Correct Answer is: larger
17. The basic motivations for swaps are shown below
Correct Answer is: all of the above
18. The first currency swap between the World Bank and IBM was arranged in 1981 by
Correct Answer is: Solomon Brothers
19. The origins of the swap market are usually regarded as an outgrowth of the following financial instruments
Correct Answer is: A and B
20. The shortcomings of parallel and back to back loans are
Correct Answer is: All of the above
21. Typically, parallel loans involve the following parties
Correct Answer is: A and C
22. Which of the following is not part of the new Financial Accounting Standards Board and the Securities and Exchange Commission’s rules regarding off balance sheet transactions
Correct Answer is: all off balance sheet transactions must stop effective January 1, 2004.
Explore the fascinating realm of Financial Swaps with our comprehensive collection of multiple-choice questions and answers. Whether you're a finance professional delving into derivative instruments, a student studying financial markets, or an investor seeking to understand hedging strategies, our repository offers invaluable insights. Dive into topics such as interest rate swaps, currency swaps, credit default swaps, and commodity swaps. Each multiple-choice question is meticulously crafted to challenge your understanding and stimulate critical thinking about the intricacies of financial swaps. From understanding the mechanics of swap contracts to analyzing their applications in risk management and speculation, our MCQs provide a comprehensive exploration of all facets of Financial Swaps. Start exploring today to deepen your knowledge and excel in navigating the complex world of derivatives trading!
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Multiple Choice Questions and Answers on Financial Swaps
Financial Swaps Multiple Choice Questions and Answers
