The Party in a Swap That Receives Fixed-Rate Payments Will

question 45

True/False

The party in a swap that receives fixed-rate payments will always have zero basis risk since the fixed-rate swap payments can be structured to cover the fixed-rate liability payments.

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Definitions:

Extinction

In behavioral psychology, it refers to the gradual weakening and eventual disappearance of a conditioned response when the conditioned stimulus is no longer paired with the unconditioned stimulus.

Operant Conditioning

A learning process where behavior is controlled by consequences, such as rewards or punishments.

Respondent Conditioning

A learning process that involves creating an association between a naturally occurring stimulus and a previously neutral stimulus.

Shaping

A method of behavior training in which positive reinforcement is used to gradually guide an individual toward a desired behavior.