Which of the Following Is NOT a Reason for the Credit

question 24

Multiple Choice

Which of the following is NOT a reason for the credit risk on a swap to be less than the credit risk on a loan?

• A)Swap contracts often extend beyond the maturity of normal loan contracts.
• B)Swap payments can be netted more easily than on a loan contract.
• C)Interest rate swaps involve interest, but not principal.
• D)Differences in credit quality between parties can be equalized through the use of standby letters of credit.
• E)All of the above are reasons for swaps to have less credit risk.

---

Definitions:

Uvula

The uvula is the small, fleshy, conical mass that hangs from the posterior edge of the middle of the soft palate, visible when one opens the mouth widely.

Larynx

is the voice box located in the throat, responsible for producing sound, protecting the airway during swallowing, and regulating the flow of air during breathing.

Pyloric Sphincter

the muscular valve regulating the passage of food from the stomach to the small intestine.

Muscularis

The layer of muscle found in various parts of the gastrointestinal tract, involved in peristalsis and the control of food movement.