Some of the Risks That a Swap Dealer Confronts Are

question 35

Multiple Choice

Some of the risks that a swap dealer confronts are "basis risk" and "sovereign risk." They are defined as

• A)"basis risk" refers to the probability that a country will impose exchange restrictions on a currency involved in a swap, and "sovereign risk" refers to a situation in which the floating rates of the two counterparties are not pegged to the same index.
• B)"basis risk" refers to a situation in which the floating rates of the two counterparties are not pegged to the same index and "sovereign risk" refers to the probability that a country will impose exchange restrictions on a currency involved in a swap.
• C)"basis risk" refers to interest rate changing unfavorably before the swap bank can lay off to an opposing counterparty the other side of an interest rate swap entered into with a counterparty, and "sovereign risk" refers to the probability that a country will impose exchange restrictions on a currency involved in a swap.
• D)"basis risk" refers to the risk of fluctuating exchange rates, and "sovereign risk" refers to a situation in which the floating rates of the two counterparties are not pegged to the same index.

Understand the significance of competition in business strategies.

Identify and explain possible competitive strategies.

Analyze challenges caused by interdependencies among performance determinants.

Describe internal constraints faced by top executives.

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Definitions:

Identity Bargaining

describes the process of negotiating one's social roles and identity within the context of interpersonal relationships or societal expectations.

Idealized Expectations

Unrealistically high standards or assumptions about a situation, experience, or relationship that often lead to disappointment.

Realities

The state of things as they actually exist, as opposed to an idealistic or notional idea of them.

Marital Burnout

The gradual deterioration of love and ultimate loss of an emotional attachment between partners.