With Regard to a Swap Bank Acting as a Dealer

question 20

Multiple Choice

With regard to a swap bank acting as a dealer in swap transactions, mismatch risk refers to

• A)the risk that arises from the situation in which the floating-rates of the two counterparties are not pegged to the same index.
• B)the risk that interest rates changing unfavorably before the sap bank can lay off to an opposing counterparty on the other side of an interest rate swap entered into with the first counterparty.
• C)the risk the swap bank faces from fluctuating exchange rates during the time it takes for the bank to lay off a swap it undertakes with one counterparty with an opposing transaction.
• D)the risk that it may be difficult or impossible to find an exact opposite match for a swap the bank has agreed take.

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Definitions:

Operant Conditioning

A training technique where behavior strength is adjusted via positive reinforcement or negative punishment.

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The process by which knowledge or skills learned in one context are applied to or influence learning in a different context.

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Concepts in psychology referring to the belief that one must meet certain standards in order to receive positive regard from others, leading to issues in self-esteem and self-acceptance.

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