Explain the role of the Intermediary in an Interest Rate Swap transaction
1. Please explain the role of the Intermediary in an Interest Rate Swap transaction? What function does intermediary perform? As intermediaries perform their service for a fee, do you think that there may be a cheaper way for a financial institution to achieve their goal of reducing interest rate risk?
2.The book discusses central bank intervention in the foreign exchange market to influence the value of a particular currency. I have a couple of questions. How big is the market for foreign currency? Do you think that central bank intervention is a good idea? Why or why not?
3. Read FPA article entitled “The Financial Desirability of Long-Term Care Insurance Versus Self-Insurance.” by Gold, Vander Linden, and Herald. This study compares the financial desirability of buying long-term care insurance versus the opportunity cost of investing the required funds.
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