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D. Price-takers prefer higher bids and lower offers
Answer: B

NEW QUESTION: 2
For the purposes of calculating VaR, an interest rate swap can be modeled as a combination of:
A. a zero coupon bond and an interest rate swap
B. two zero coupon bonds
C. a fixed rate bond and a zero coupon bond
D. a fixed coupon bond and a floating rate note
Answer: D
Explanation:
Explanation
In an interest rate swap, the parties agree to exchanging interest rate payments, with one party being a fixed interest rate payer and the other paying floating rates. The party receiving fixed rates and paying floating can be considered to be long a fixed rate bond and short a floating rate note. Therefore an IRS can be modeled as a combination of a fixed coupon bond and a floating rate note. Choice 'b' is the correct answer.

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A. Option D
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Answer: C
Explanation:
Explanation
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