24-70 a Total Return Credit Swap

question 87

Multiple Choice

24-70 A total return credit swap

• A)can allow an FI to maintain long-term customer lending relationships without bearing the full credit risk exposure from these relationships.
• B)involves exchanging an obligation to pay interest at a specified rate for payments representing the total return on a loan of a specified amount.
• C)can be important because credit risk is more likely to cause an FI to fail than either interest rate risk or FX risk.
• D)All of the above.
• E)Answers A and C only.

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Definitions:

Goal-Directed Behavior

Actions undertaken with the intention of achieving a specific outcome, reflecting the ability to identify, plan for, and realize objectives.

Inborn

Characterizing traits or qualities that are present from birth, not acquired or learned.

Specific Need

A particular or distinct requirement essential to an individual's well-being or situation.

Directs Behavior

Influences or guidance mechanisms that shape or determine an individual's actions in a specific direction or manner.