- 20 Marks
MFS – JUL 2020 – L2 – Q5 – Liquidity of Assets and Interest Rate Swaps
Discuss the liquidity of specific assets and explain how companies use interest rate swaps for managing interest rate risk.
Question
a) Discuss the degree of liquidity of the following assets
i. Treasury bills
ii. Gilt-edged stock
iii. Bank notes
iv. Certificates of deposit
b) Explain how a company may use interest rate swap as a means of managing interest rate risk.
[Total Marks: 20]
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