One of the Main Risks Eliminated with Cross-Currency Swaps Once

question 36

Multiple Choice

One of the main risks eliminated with Cross-Currency Swaps once compared to back-to-back loans is

• A) interest rate risk because the swap dealer locks the interest rates.
• B) counterparty risk because the intermediary serves as a guarantor.
• C) balance sheet risk since the swap is reported on the balance sheet as liability.
• D) all of the above

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Definitions:

Economic Relationship

Describes the connections and interactions between different economic entities, such as countries, organizations, or individuals, usually in terms of trade, investment, and financial exchanges.

United States

A country in North America consisting of 50 states, known for its large economy, diverse population, and significant cultural and political influence worldwide.

Mexico

A country in North America, bordered by the United States to the north, the Pacific Ocean to the south and west, Guatemala, Belize, and the Caribbean Sea to the southeast, and the Gulf of Mexico to the east.

1910

Refers to the year which marked significant events globally such as the start of the Mexican Revolution and advancements in technology and society at the early 20th century.