If a US Institution in a Forward Swap Would Like to Lock

question 27

Multiple Choice

If a U.S. institution in a forward swap would like to lock in the fixed rate that it will pay when the swap period begins, it is probably concerned that interest rates will ____; the counterparty is likely adversely affected by ____ interest rates.

• A)increase; increasing
• B)increase; declining
• C)decrease; declining
• D)decrease; increasing
• E)None of these are correct.

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