Question #2
Reading: Reading 25 The Term Structure and Interest Rate Dynamics
PDF File: Reading 25 The Term Structure and Interest Rate Dynamics.pdf
Page: 1
Status: Correct
Correct Answer: B
Question
Which one of the following is least likely a reason to use the swap rate curve?
Answer Choices:
A. The swap market is not regulated by any government
B. Swap rates reflect credit risk of commercial banks and not government
C. Swap rates are less volatile than government bond yields
Explanation
Lower volatility of swap rates relative to government bond yields as a generalization is an
incorrect statement.