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:

Economic Outputs

The total value of all goods and services produced by an economy over a specific period of time.

Gross Domestic Product

The total value of all goods and services produced within a country over a specific time period.

Human Development Index

A composite statistic of life expectancy, education, and per capita income indicators, which are used to rank countries into four tiers of human development.

Carrying Capacity

The largest number of individuals of a species that can be supported indefinitely by an environment, considering the availability of essential resources such as food, living space, water, and other requirements.