1) The disadvantage of swaps is that
A) they lack liquidity.
B) it is difficult to arrange for a counterparty.
C) they suffer from default risk.
D) all of the above.
2) The biggest danger of financial derivatives occurs
A) when notional amounts exceed a bank's capital.
B) when financial market prices and rates are highly volatile.
C) in trading activities of financial institutions.
D) in the large amount of credit exposure.