You Are Entering into a Swap as a Fixed Rate

question 379

Multiple Choice

You are entering into a swap as a fixed rate receiver with Party A and into an offsetting position with party B. All other things being equal, which of the scenarios below will lead to the greatest increase in the sum of the Credit Value Adjustments for A and B?

• A) upward shift of the swap curve and rating downgrade of party A
• B) downward shift of the swap curve and rating downgrade of party A
• C) downward shift of the swap curve and rating downgrade of party B
• D) downward shift of the swap curve only

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Definitions:

Debit Card

A payment card that deducts money directly from a consumer’s checking account to pay for purchases.

Checking Account

A type of bank account that allows for easy access to funds for daily transactions through checks, debit cards, or electronic means.

M1

A category of the money supply that includes all physical currency, demand deposits, traveler's checks, and other checkable deposits.

U.S. Treasury

The federal department responsible for managing government revenue, including producing currency, managing national accounts, and administering public finance.