24-37 Which of the following is an advantage of having swap dealers?
A)They serve the function of taking the opposite side of each transaction in order to keep the swap market liquid.
B)They reduce the search costs of finding counterparties having mirror image financing requirement.
C)They generally guarantee swap payments over the life of the contract.
D)They incur any costs associated with the default by replacing the defaulting party on the same terms as the original swap.
E)All of the above.

Question

Quizplus · Accepted Answer

All of the options listed are advantages of having swap dealers. Swap dealers provide liquidity to the market by taking the opposite side of each transaction, reduce search costs by matching counterparties with mirror image financing requirements, generally guarantee swap payments over the life of the contract, and incur any costs associated with default by replacing the defaulting party on the same terms as the original swap.

24-37 Which of the Following Is an Advantage of Having