If the Bank Wishes to Set Up a Swap to Totally

question 47

Multiple Choice

If the bank wishes to set up a swap to totally hedge the interest rate risk, the bank should

• A) pay a variable rate of interest and receive a fixed rate of interest.
• B) pay a fixed rate of interest and receive a variable rate of interest.
• C) pay a variable rate of interest and receive a variable rate of interest.
• D) pay a fixed rate of interest and receive a fixed rate of interest. Risk is from falling interest rates or rising prices with a positive repricing gap.

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Definitions:

Isotope

A variant of a particular chemical element that has the same number of protons but a different number of neutrons in its nucleus, leading to variations in atomic mass.

Dosimeter

A device used to measure exposure to ionizing radiation.

Gonad Shield

Protective equipment used during diagnostic radiographic procedures to protect the reproductive organs from exposure to radiation.

Tomography

Imaging by sections or sectioning, through the use of any kind of penetrating wave or mechanical vibrations.