Which of the Following Is Not an Interest-Rate Swap

question 17

Multiple Choice

Which of the following is not an interest-rate swap?

• A)A fixed-for-floating swap involving exchange of fixed interest rate payments in one currency for floating payments in the same currency but in which the swap NPV at inception is non-zero.
• B)A floating-for-floating swap in which one floating rate in a currency is exchanged for another floating rate in the same currency.
• C)A fixed-for-floating swap in which a fixed interest rate payment in one currency is exchanged for floating interest-rate payments in another currency.
• D)A fixed-for-floating swap involving exchange of fixed interest rate payments in one currency for floating payments in the same currency but in which the payments are computed on principal that is reduced in a pre-specified manner during the life of the swap.

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Definitions:

Market Risk

The risk of losses in investments caused by factors that affect the entire market, such as economic recession or political instability.

Treasury Bonds

Long-term government bonds issued by the Treasury Department with maturity periods typically longer than 10 years.

Beta Coefficient

The beta coefficient measures the volatility of a stock or portfolio in comparison to the market as a whole, indicating its relative risk.

Systematic Risk Factors

Factors that affect the overall financial market and cannot be mitigated through diversification. These include interest rates, inflation, and economic recessions.