Cross Currency Swaps Typically Have Larger Swings in Total Value

question 18

Multiple Choice

Cross currency swaps typically have larger swings in total value than "plain vanilla" interest rate swaps because

• A) cross currency swaps exchange principal as well as interest payments.
• B) interest rate movements are more volatile than currency movements.
• C) interest rate swap agreements do not allow, contractually, large movements from par.
• D) all of the above.

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Definitions:

Vertical Position

The placement or arrangement of something in relation to a vertical axis or direction.

Sensory Interaction

The principle that one sense can influence another, as when the smell of food affects its taste.

Green-colored

Characterized by or having the color of green, which is visually perceived between blue and yellow.

Difference Thresholds

the minimum difference in stimulus intensity required to detect a difference between two stimuli.