If a swap is effectively terminated by entering into the opposite swap with another counterparty,the credit risk will be eliminated.

Name: If a swap is effectively terminated by entering into the opposite swap with another counterparty,the credit risk will be eliminated.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Entering into the opposite swap with another counterparty may reduce the credit risk, but it does not eliminate it completely as there is still a possibility of default by either counterparty.

If a Swap Is Effectively Terminated by Entering into the Opposite