Explain what comparative advantage

Reference no: EM133655507

Questions

1. Explain what a swap bank is. List and explain two benefits of using a swap bank.

2. Explain what comparative advantage is, in the context of swaps. What is a possible source of comparative advantage in this scenario?

3. Explain two motives for using interest rate swaps. Supplement the answer with examples.

4. Explain why swaps entail credit risk. Discuss the relationship between the value of the swap and credit risk exposure.

Reference no: EM133655507

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