Companies with high credit risks are the ones that cannot access fixed-rate markets
Chapter 7, Problem 7.14(choose chapter or problem)
Companies with high credit risks are the ones that cannot access fixed-rate markets directly. They are the companies that are most likely to be paying fixed and receiving floating in an interest rate swap. Assume that this statement is true. Do you think it increases or decreases the risk of a financial institutions swap portfolio? Assume that companies are most likely to default when interest rates are high.
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