A 5-Year Swap Contract Can Be Viewed as a Portfolio

question 19

Multiple Choice

A 5-year swap contract can be viewed as a portfolio of 5 forward contracts with maturities of 1, 2, 3, 4 and 5 years. One important exception is that

• A)the forward price is the same for the swap contract but not for the forward contracts.
• B)the swap contract will have daily resettlement.
• C)the forward contracts will have resettlement risk.
• D)none of the above.

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Definitions:

Writ Of Garnishment

A legal order issued by a court that allows for the withholding of a person's assets or earnings for the payment of a debt.

Public Policy

Public policy represents the fundamental guidelines or principles that govern the actions and decisions of a government, reflecting the social and economic priorities of the society.

Judicial Liens

Legal claims against property that are obtained through court judgment, often used to secure payment of a debt or fulfillment of an obligation.

Garnishments

Legal orders requiring a portion of an individual's earnings to be withheld by an employer for the payment of a debt.