When a Bank Enters into a Fixed-Floating Currency Swap, It

question 44

Multiple Choice

When a bank enters into a fixed-floating currency swap, it is exposed to

• A)both interest rate and currency exposures.
• B)only interest rate exposures.
• C)only exchange rate exposure.
• D)zero interest rate exposure over the life of the swap.
• E)zero interest rate and currency exposure over the life of the swap.

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Definitions:

Equilibrium Reaction

A chemical reaction in which the rates of the forward and reverse reactions are equal, resulting in no net change in the concentrations of the reactants and products.

K

K is the chemical symbol for potassium, an essential dietary mineral and electrolyte necessary for various bodily functions, including nerve transmission and muscle contraction.

Acetic Acid

A weak, organic acid with the formula CH3COOH, known for its pungent smell and sour taste, and used in the production of vinegar.

Equilibrium Reaction

A chemical reaction in which the rate of the forward reaction equals the rate of the reverse reaction, resulting in no net change in the concentrations of reactants and products.