In Order to Reduce Interest Rate Swap Risk Exposures,a Financial

question 1

Multiple Choice

In order to reduce interest rate swap risk exposures,a financial intermediary may:

• A) practise marking-to market.
• B) use margin calls.
• C) ask for security collateral.
• D) do all of the given answers.

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Definitions:

Soft Loans

Loans that are offered with more favorable terms than market loans, typically including lower interest rates and longer repayment periods.

Developing Countries

Nations with a lower level of industrialization, lower standard of living, and lower Human Development Index compared to developed countries.

International Development Association

A part of the World Bank that helps the world’s poorest countries by providing loans and grants for projects and programs that boost economic growth and improve living conditions.

Private Capital Investment

The spending of resources by private individuals or enterprises on assets expected to yield returns over time, such as shares, real estate, or machinery.