Company CPN and dealer SwapFin are engaged in three transactions with each other. From Swap-Fin's perspective, the

Question:

Company CPN and SwapFin are engaged in three transactions with each other. From Swap-Fin's perspective, the market values are as follows:
Swap 1 ..........-$2,000,000
Forward 1.......+$1,500,000
Option 1..........-$ 500,000
.....................-$1,000,000
Explain the consequences to SwapFin if CPN defaults with and without closeout netting. In your answer, explain what is meant by cherry picking?
Dealer
A dealer in the securities market is an individual or firm who stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). A dealer seeks to profit from the spread between the...