When Are the Standby Letters of Credit Used in Swap

question 23

Multiple Choice

When are the standby letters of credit used in swap agreements?

• A)When the counterparty is perceived to be of significantly lower credit quality than the other party.
• B)Where the swap agreement is made between parties of equal credit standing.
• C)Where the swap agreement is made between high-quality counterparties.
• D)When one party posts collateral in lieu of default.

---

Definitions:

Knights of Labor

A leading American labor organization in the 19th century that advocated for the rights of workers, including promoting an eight-hour work day and the abolition of child labor.

Terence Powderly

An American labor union leader who served as head of the Knights of Labor in the late 19th century, promoting workers' rights and the eight-hour workday.

Judicial Protection

The safeguarding of rights and freedoms of individuals and entities by the judiciary, ensuring legal protection against violations.

Property Rights

Property rights are the legal rights to use, control, and dispose of property, including real estate, intellectual property, and personal possessions.