Exchange acts as the counterparty for all transactions

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Reference no: EM13920408

Which of the following statements is CORRECT?

a) Futures contracts have less default risk because the exchange acts as the counterparty for all transactions

b) Forward contracts trade on an organized exchange and are marked to market daily.

c) Goods are never delivered under forward contracts, but are almost always delivered under futures contracts.

d) Forward contracts are available on individual stocks and futures contracts are for commodities.

Which statement is FALSE?

a) Interest Rate swaps often involve companies trading fixed rates for floating rates

b) Companies should always try to reduce risk whenever they can.

c) The coupon rate on Inverse Floaters goes up when interest rates fall

d) Credit Default Swaps pay off when a company goes bankrupt, thus they are like an insurance policy on bonds.

Reference no: EM13920408

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