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A major risk faced by a swap dealer is mismatch risk

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53)A major risk faced by a swap dealer ismismatch riskThis is.A)the probability floating rates and exchange rateswillnotmove together.B)the difficulty in finding a second counterpartywith an exact opposite match for a swap that the bank hasagreed to take with another counterparty.C)the probabilitythat both counterpartiesdefault.D)none of theoptions
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solutiontestbank.com54)Some of the risks that a swap dealer confronts are"basis risk" and "sovereign risk." Select the definitions thatbest describe each.
55)A major risk faced by a swap dealer issovereign riskThis is.
56)In an efficient market without barriers to capital flows,the cost-savings argument of the QSD is difficult to accept,because
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solutiontestbank.comrisk premiums on different types of debt instruments.B)it implies that an arbitrage opportunity existsbecause of some mispricing of the exchange rates on differentmaturities of forward contracts.C)it implies that an arbitrage opportunity existsbecause of some mispricing of the default risk premiums ondifferent types of debt instruments, and it implies that anarbitrage opportunity exists because of some mispricing of theexchange rates on differentmaturities of forwardcontracts.D)none of theoptions

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Term
Spring
Professor
N/A
Tags
Exchange Rate, Interest, Forward contract, Interest rate swap, Forward price

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