What Kind of Interest Rate Swap (Of Liabilities) Would an FI

question 5

Multiple Choice

What kind of interest rate swap (of liabilities) would an FI with a positive funding gap utilize to hedge interest rate risk exposure?

• A)Swap floating-rate payments for fixed-rate payments.
• B)Swap floating-rate receipts for fixed-rate payments.
• C)Swap fixed-rate receipts for floating-rate receipts.
• D)Swap floating-rate receipts for fixed-rate receipts.
• E)Swap floating-rate payments for fixed-rate receipts.

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Definitions:

Medigap

Private insurance that Medicare recipients can purchase to reduce the gap in coverage—the amount they would have to pay from their own pockets after receiving Medicare benefits.

Relative Value

A measure of the worth of something in comparison to the price, quantity, or value of another item or measure.

Prepayment

The act of paying for goods, services, or expenses in advance before receiving or using them.

Capitation

A payment structure in which a health maintenance organization pre-pays an annual set fee per patient to a physician.