Which of the Following Statements About the Notional Amount of an Interest-Rate

question 131

Multiple Choice

Which of the following statements about the notional amount of an interest-rate swap is correct?

• A) The notional amount is just another term for the swap dealer's profit
• B) The notional amount is added to the lowest fixed rate available and shared between the counterparties
• C) The notional amount is the amount that is subject to this swap, but not exchanged
• D) The notional amount is the loan amount exchanged in the swap

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Definitions:

Government Securities

financial instruments issued by the government to finance its fiscal deficits, including bonds, bills, and notes, which are considered safe investments.

Federal Reserve Board

This is the governing body of the Federal Reserve System, responsible for overseeing the United States' central banking system and setting monetary policy.

Members Appointed

Members appointed refer to individuals who are placed in a position or role within an organization or board by selection rather than election.

Open Market Committee

A committee within a central bank, like the Federal Reserve in the United States, that makes key decisions about interest rates and the growth of the United States money supply.