Which of the Following Is NOT a Reason for the Credit

question 64

Multiple Choice

Which of the following is NOT a reason for the credit risk on a swap to be less than the credit risk on a loan?

• A)Swap contracts often extend beyond the maturity of normal loan contracts.
• B)Swap payments can be netted more easily than on a loan contract.
• C)Interest rate swaps involve interest, but not principal.
• D)Differences in credit quality between parties can be equalized through the use of standby letters of credit.
• E)All of the options are reasons for swaps to have less credit risk.

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Definitions:

Sustainable Procurement

The acquisition of goods and services in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organization but also to society and the economy, while minimizing damage to the environment.

Buying Process

The sequence of steps a consumer or organization follows from recognizing a need, through purchase, to post-purchase evaluation.

Environmental Considerations

Assessment of the environmental impacts associated with products or activities and the implementation of measures to reduce negative effects.

Supply Partnership

A long-term relationship between a buyer and a supplier characterized by mutual cooperation, shared risks, and investments to achieve joint value creation.