Which of the Following Is NOT a Reason for the Credit

question 57

Multiple Choice

Which of the following is NOT a reason for the credit risk on a swap to be less than the credit risk on a loan?

• A)Swap contracts often extend beyond the maturity of normal loan contracts.
• B)Swap payments can be netted more easily than on a loan contract.
• C)Interest rate swaps involve interest, but not principal.
• D)Differences in credit quality between parties can be equalized through the use of standby letters of credit.
• E)All of these are reasons for swaps to have less credit risk.

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Definitions:

Individualistic Culture

A society that values independence and self-reliance, emphasizing personal freedom and achievement rather than collective goals.

Japan

Japan is an island country in East Asia, known for its rich cultural heritage, advanced technology, and distinctive blend of traditional and modern lifestyles.

Great Britain

A geographical term that refers to the largest island in the British Isles, comprising England, Scotland, and Wales.

Collectivist Culture

A culture that emphasizes the needs and goals of the group as a whole over the needs and wishes of each individual.