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:

Shaded Area

The portion of a graph or diagram overlaid with a color or pattern to denote a particular section or significance.

Shaded Area

This refers to the region that is visually differentiated by a darker shade on a graph or diagram, often used to highlight specific sections.

Z-scores

Z-scores are standardized scores indicating how many standard deviations an element is from the mean.

Standard Normal Distribution

A normal distribution with a mean of zero and a standard deviation of one, used in z-tests of statistical significance.