Identify the CORRECT Statement Below Regarding an Overnight Indexed Swap

question 34

Multiple Choice

Identify the CORRECT statement below regarding an overnight indexed swap (OIS) .

• A)Interest and principal payments are exchanged at the beginning of the swap.
• B)The net settlement is a single payment at the end of the swap term.
• C)The fixed-rate payments are set to be equal to the cash rate.
• D)OISs are usually long-term arrangements.
• E)OISs are used to hedge an exposure to money-market yields.

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Definitions:

Mutually Exclusive Projects

Mutually exclusive projects are investment decisions where the acceptance of one project results in the rejection of another.

Different Lives

A term typically used in capital budgeting to describe projects or assets with varying operational life spans, complicating comparisons.

Senior Management

The highest level of executives who are responsible for the overall management and strategic direction of a company.

Significant Downsizing

A strategic reduction in a company's workforce to improve efficiency or reduce costs.