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(TRUE / FALSE) The use of swap rates rather than treasury rates as a basis for pricing fixed-rate
debt came about partly as a result of events (such as the Russian debt default) causing “flights to
quality” that distorted US treasury yields as reflective of true long-term risk.
Solution
Its true because treasury rate is not reflecting true risk for the pricing fixed rate debt. Swap rate is
good proxy for treasury rate for pricing fixed rate debt.

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