Which of the following statements is INCORRECT? Sovereign risk in a swap refers to the risk...

Which of the following statements is INCORRECT? Sovereign risk in a swap refers to the risk that a country will impose restrictions that interfere with the performance of the swap. b)Interest rate risk in a swap refers to the risk that interest rates changing unfavorably before the swap bank can lay off to an opposing counterparty on the other side of an interest rate swap entered into with the first counterparty.Credit risk in a swap refers to the risk that a counterparty will default. c)Mismatch risk in a swap refers to the risk that the swap bank is unable to find a second counterparty for a swap that the bank has agreed to take with another party. d)Basis risk in a swap refers to the risk that exchange rates move against the swap bank after it has only gotten half of a swap set up.

Expert Solution

Mismatch risk in a swap refers to the risk that the swap bank is unable to find a second counterparty for a swap that the bank has agreed to take with another party

jeff jeffy answered 2 years ago

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