What Is the Special Feature of an Off-Market Swap Arrangement

question 4

Multiple Choice

What is the special feature of an off-market swap arrangement?

• A)It involves special nonstandard considerations that must be negotiated between the parties.
• B)The swap is used to hedge against exchange rate risk from mismatched currencies on assets and liabilities.
• C)It involves additional financing costs resulting from the fixed-fixed currency swap.
• D)It involves an obligation to pay interest at a fixed or floating rate for payments representing the total return on a specified amount.
• E)FI receives the par value of the loan on default in return for paying a periodic swap fee.

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Definitions:

Market Price

The current amount at which an asset or service can be bought or sold.

Dividends Per Share

Measures the extent to which earnings are being distributed to common shareholders.

Liquidity

The simplicity of turning an asset into cash without impacting its market value.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company using its assets to generate sales or revenue.