24-76 Which of the Following Is True of the "Netting

question 27

Multiple Choice

24-76 Which of the following is true of the "netting" process in the swap market?

• A)It mitigates the credit risk on swaps.
• B)Both parties make payments to each other as a consequence.
• C)It implies that the default exposure of the in-the-money party is the total fixed or floating payment.
• D)It does not happen across contracts.
• E)Netting by novation increases the potential risk of loss.

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