In order to measure and manage interest rate swap risk exposures,a financial intermediary may:
A) practise marking-to market.
B) seek security collateral.
C) require a written performance guarantee from the counterparty's sponsor.
D) do all of the given answers.

Question

Quizplus · Accepted Answer

In order to effectively manage and measure interest rate swap risk exposures, a financial intermediary may practice marking-to-market to stay aware of the current value of the swap, seek security collateral to mitigate counterparty risk, and require a written performance guarantee from the counterparty's sponsor to provide some additional assurance. Therefore, all of the given choices (A, B, and C) are valid options.

In Order to Measure and Manage Interest Rate Swap Risk