B is corrent. An interest rate swap agreement involves the exchange of cash flows determined by different interest rates. Fluctuations in interest rates after the agreement is entered into may result in the risk of exchanging a lower interest rate for a higher interest rate. Financial instruments, including swaps, also bear credit risk or the risk that a counterparty to the agreement will not perform as expected. Therefore, this answer is correct.
A is incorrect. An interest rate swap agreement involves the exchange of cash flows determined by different interest rates. Fluctuations in interest rates after the agreement is entered into may result in the risk of exchanging a lower interest rate for a higher interest rate. Financial instruments, including swaps, also bear credit risk or the risk that a counterparty to the agreement will not perform as expected.
C is incorrect. An interest rate swap agreement involves the exchange of cash flows determined by different interest rates. Fluctuations in interest rates after the agreement is entered into may result in the risk of exchanging a lower interest rate for a higher interest rate. Financial instruments, including swaps, also bear credit risk or the risk that a counterparty to the agreement will not perform as expected.
D is incorrect. An interest rate swap agreement involves the exchange of cash flows determined by different interest rates. Fluctuations in interest rates after the agreement is entered into may result in the risk of exchanging a lower interest rate for a higher interest rate. Financial instruments, including swaps, also bear credit risk or the risk that a counterparty to the agreement will not perform as expected.
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