答案和详解如下：

6.Which of the following is a reason to use the swaps market rather than the futures market? To:

A)   reduce the credit risk involved with the contract.

B)   increase the liquidity of the contract.

C)   maintain the firm's privacy.

D)   provide for a standardized contract.

The correct answer was C)

The futures market, because of the use of a standardized contract, is more liquid; and, because the exchange guarantees the contract, futures contracts have less credit risk. However, swaps contracts, because they are over-the-counter (private) contracts, allow the firm to maintain privacy.

7.Which of the following is NOT considered a reason for using the swaps market? To:

A)   reduce transactions costs.

B)   obtain cheaper financing.

C)   exploit market inefficiencies.

D)   maintain privacy.

The correct answer was C)

Historically, the two basic motivations for swaps were to exploit market inefficiencies and attempt to achieve cheaper financing. Today, the swaps market has matured and now offers few arbitrage opportunities to exploit market inefficiencies. In addition to seeking cheaper financing, current reasons for using swaps include reducing transactions costs, avoiding costly regulations, and maintaining privacy.

8.Which of the following statements about notional principal in plain vanilla interest rate swaps is least accurate? Notional principal:

A)   is not exchanged by the counterparties.

B)   does not vary during the swap tenor.

C)   is used to calculate the fixed rate interest payment; the swap's market value is used to calculate the floating rate payment.

D)   is determined by the counterparties.

The correct answer was C)

The notional amount is used to calculate both the fixed and the floating rate payment streams. All other choices are true.

9.Which of the following statements about a currency swap is least accurate?

A)   Most currency swaps are done to exploit market inefficiencies.

B)   Notional principal is exchanged at the termination of the swap.

C)   The periodic interest payments are exchanged in full each period.

D)   Notional principal is exchanged at the initiation of the swap.

The correct answer was A)

Unlike interest rate swaps, notional principal is swapped at both the initiation and the termination of the swap. Full interest payments are exchanged at each settlement date. Exploiting market inefficiencies was once a motivation for currency swaps, but it is not today (because the market is efficient). Today motivations range from reducing transactions costs to maintaining privacy to avoiding regulation.

10.Which transaction would least likely be classified as an interest rate swap?

A)   Pay USD fixed, receive U.S. LIBOR.

B)   Receive AUD fixed, pay NZD floating.

C)   Receive U.S. fixed, pay U.S. commercial paper.

D)   Pay JPY fixed, receive JPY floating.

The correct answer was B)

Because it involves two different currencies, this would be a currency swap.