The Effect to an FI of Default by the Counterparty

question 38

Multiple Choice

The effect to an FI of default by the counterparty to a derivative contract is LEAST serious with

• A)options contracts.
• B)futures contracts.
• C)swap agreements.
• D)forward contracts.
• E)loan commitments.

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Definitions:

Direct Labour Cost

The wages and benefits paid to workers who are directly involved in the production of goods or services.

Manufacturing Overhead Cost

All indirect costs related to the manufacturing process, including utilities, depreciation, and maintenance of equipment and facilities.

Manufacturing Overhead

Expenses related to the manufacturing process that are not directly tied to specific products, such as salaries of supervisory staff and factory maintenance.

Direct Materials

Materials that are traceable to the production of specific goods or services and included in the cost of those goods or services.