Which of the following statements is incorrect?

1)	An interest rate swap is a succession of forward contracts on interest rates arranged by two parties that allows for the exchange of fixed-interest payments for floating payments; as such, it allows an FI to place a long-term hedge.

2)	When calculating the number of hedges required for a position, the number should always be rounded up to cover the full position.

3)	Basis risk occurs on a loan commitment because the spread of a pricing index over the cost of funds may vary.

4)	In a put option, the purchaser of the bond option is committed to handing over the specified bond at a specified time.