Consider a Fixed-For-Floating US Dollar-Korean Won Currency Swap in Which

question 20

Multiple Choice

Consider a fixed-for-floating US dollar-Korean won currency swap in which an investor pays USD floating and receiving KRW fixed. From a cash-flow perspective, the swap is equivalent to a situation in which

• A) The investor has received a KRW fixed-rate loan and made a USD floating-rate loan.
• B) The investor has borrowed floating-rate USD and loaned KRW fixed-rate.
• C) The investor is short a USD floating rate loan and long a KRW fixed-rate borrowing.
• D) The investor has entered into a back-to-back loan agreement with his counterparty with fixed rates on both loans.

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Definitions:

General Adaptation Syndrome

A model that describes the body's short-term and long-term reactions to stress, introduced by Hans Selye, consisting of three stages: alarm, resistance, and exhaustion.

Continued Exposure

Continued exposure refers to the repeated or prolonged contact with a stimulus or environment, often used as a psychological treatment method.

Stress

A physiological, psychological, or emotional element that induces stress in the body or mind, potentially contributing to the development of illnesses.

Alcohol

A psychoactive substance commonly found in beverages like beer, wine, and spirits, known for its intoxicating effects.