Examlex

Solved

A Credit Forward Is a Forward Agreement That Hedges Against

question 59

True/False

A credit forward is a forward agreement that hedges against an increase in default risk on a loan after the loan has been created by a lender.


Definitions:

Interest Rates

The cost of borrowing money or the compensation for the service and risk of lending money, expressed as a percentage of the principal loan amount.

Interest

The price paid for borrowing money, often expressed as a percentage of the principal amount over a certain period.

Net Present Value

A financial metric that calculates the current value of a series of future cash flows by discounting them back to the present time.

Interest Rate

The part of a loan that accrues interest for the borrower, customarily denoted as a yearly percentage of the loan's outstanding sum.

Related Questions