13-77 the Effect to an FI of Default by the Counterparty

question 4

Multiple Choice

13-77 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:

Sensory Preconditioning

A learning process where a neutral stimulus becomes capable of eliciting a response after being paired with another stimulus that naturally evokes a reaction.

Conditioned Response

A learned response to a previously neutral stimulus that has been repeatedly paired with an unconditioned stimulus.

Contiguity

A principle in psychology and learning theory that suggests that events experienced close together in time or space are likely to be associated with each other.

Contrapreparedness

An inability to associate a specific conditioned stimulus (CS) and a specific unconditioned stimulus (UCS) despite repeated conditioning experiences