A Total Return Swap Involves Transferring Both

question 87

Multiple Choice

A total return swap involves transferring both

• A)credit and default risk.
• B)interest rate and credit risk.
• C)default and exchange rate risk.
• D)credit and exchange rate risk.

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Definitions:

Bushels

A unit of volume that is used to measure agricultural commodities in the United States.

Corn

A cereal grain primarily used as livestock feed, biofuel, and as a staple food in many parts of the world, significant in agricultural economics.

Cross-hedging

An investment strategy used to manage risk by investing in assets indirectly related to the primary exposure.

Hedging

A risk management strategy used to limit or offset the probability of loss from fluctuations in the prices of commodities, currencies, or securities.