The primary risk in swaps is that:
A) interest rates will not change.
B) one of the parties will default.
C) they are highly liquid and the market price will change.
D) high U.S. government deficits will limit the availability of swaps.

Question

Quizplus · Accepted Answer

The primary risk in swaps is counterparty credit risk. There is a chance that one of the parties involved in the swap will default on their obligation, leaving the other party exposed to potentially significant losses. The other answer choices are not the primary risks associated with swaps.

The Primary Risk in Swaps Is That