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5. The chart below shows three exposure profiles, where the exposure metric is the potential future exposure (PFE): PFE of an interest rate swap (IRS),

5. The chart below shows three exposure profiles, where the exposure metric is the potential future exposure (PFE): PFE of an interest rate swap (IRS), PFE of a foreign exchange (FX) forward contract, and PFE of a cross cross-currency swap. Also plotted is the average PFE of the interest rate swap, where "average PFE" is the average worst credit exposure (AWCE). Which position's (instrument's) exposure profile is most likely the uppermost, concave plot line?

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A. PFE of interest rate swap

B. PFE of foreign exchange (FX) contract

C. PFE of cross-currency swap

D. Average PFE of interest rate swap

PFE Time

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