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The swap rate in plain vanilla swap: Is the exact average of the forward rates Is a multi-period fixed rate Is always the current interest
- The swap rate in plain vanilla swap:
- Is the exact average of the forward rates
- Is a multi-period fixed rate
- Is always the current interest rate
- Is the rate paid by the floating-rate payer
- In relation to the bond market, wide credit spreads:
- Tend to narrow during times of crisis, like GFC
- Increase the profitability of trading for bond dealers
- Show that investors are concerned about risk posed by bonds
- Is an indicator of a very liquid market.
- Dealers in the bond market:
- Trade in both wholesale and retail amounts
- Earn a commission when the trade is. Completed
- Will make margin payments to the clearinghouse
- When quoting will bid high and offer low
- If the AUD/USD exchange rate decreased from 0.7861 to 0.7858 this indicates:
- A depreciation in the AUD
- An appreciation in the AUD
- A depreciation in the USD
- None of the above
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