Which of the following statements is false?
A) The swap contract-like forward and futures contracts-is typically structured as a "zero-cost" security.
B) An interest rate swap is a contract entered into with a bank, much like a forward contract, in which the firm and the bank agree to exchange the coupons from two different types of loans.
C) In a standard interest rate swap, one party agrees to pay coupons based on a fixed interest rate in exchange for receiving coupons based on the prevailing market interest rate during each coupon period.
D) If short-term interest rates were to fall while long-term rates remained stable, then short-term securities would fall in value relative to long-term securities, despite their shorter duration.

Question

Quizplus · Accepted Answer

D) If short-term interest rates were to rise while long-term rates remained stable, then short-term securities would fall in value relative to long-term securities, despite their shorter duration.

Which of the Following Statements Is False