The Principal in an Interest Rate Swap Is

question 123

Multiple Choice

The principal in an interest rate swap is:

• A)Always transferred from the originator to the counterparty of the swap.
• B)Is usually held by a clearinghouse to guarantee payment.
• C)Usually borrowed from a third party.
• D)Is not borrowed, lent, or exchanged.It just serves as the basis for the calculation of cash flows.

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Definitions:

Renewal Effect

The phenomenon where extinguished responses reappear when the context or environment is changed after extinction.

Negative Reinforcement

A process in operant conditioning where a response is strengthened by the removal or avoidance of an unpleasant stimulus.

Stimulus Generalization

The tendency for a response that has been conditioned to one stimulus to be triggered by stimuli that are similar to the original stimulus.

Higher-Order Conditioning

A process in behavioral psychology where a stimulus that initially has no significance comes to elicit a response after being associated with a stimulus that already elicits that response.