Which of the following is an unlikely reason for firms to participate in the swap market?
A) To replace cash flows scheduled in an undesired currency with cash flows in a desired currency.
B) Firms may raise capital in one currency but desire to repay it in another currency.
C) Firms desire to swap fixed and variable payment or receipt of funds.
D) All of the above are likely reasons for a firm to enter the swap market.

Question

Quizplus · Accepted Answer

All of the reasons listed are common motivations for firms to participate in the swap market. There are other potential reasons such as managing interest rate risk, but the options listed in the question are all valid drivers for swap market activity.

Which of the Following Is an Unlikely Reason for Firms