1. The probable risk that a participant of swap contract bears when other participants are unable to pay the owed amount under the contract is called:

Group of answer choices

[A] interest rate risk

[B] credit risk

[C] counterparty risk

[D] market risk

2.A Swap:

Group of answer choices

[A] obligates two counterparties to exchange cash flows at one or more future dates.

[B] allows participants to restructure their balance sheets.

[C] allows a firm to convert outstanding fixed rate debt to floating rate debt.

[D] All of the above.

3. The single largest interest rate risk of a company is:

Group of answer choices

[A] interest sensitive securities

[B] variable-rate debt

[C] dividend payments

[D] accounts payable

4. The market for CDSs has grown dramatically over the last decade, and there has been an increase in the creation of other credit derivatives. Which of the following is NOT a type of credit derivative?

Group of answer choices

[A] basket CDS

[B] CDS forward contracts

[C] total return swaps

[D] contingent CDS

[E] CDS option contracts

[F] all of the above