1)The disadvantage of swaps is that

A) they lack liquidity.

B) it is difficult to arrange for a counterparty.

C) they suffer from default risk.

D) all of the above.

2)

The biggest danger of financial derivatives occurs

A) when notional amounts exceed a bank's capital.

B) when financial market prices and rates are highly volatile.

C) in trading activities of financial institutions.

D) in the large amount of credit exposure.