In a swap, two parties are exchanging payments. The risk that one party will fail to meet its obligation to make payments is called:
A) Default risk.
B) Counterparty risk.
C) Credit risk.
D) Price risk.
E) None of the above.

Question

Quizplus · Accepted Answer

Counterparty risk is the risk that the other party in a financial transaction, such as a swap, will not fulfill their payment obligations.

In a Swap, Two Parties Are Exchanging Payments