The same types of risks that apply to interest rate swaps may also apply to currency swaps, except that currency swaps are not subject to basis risk.

Name: The same types of risks that apply to interest rate swaps may also apply to currency swaps, except that currency swaps are not subject to basis risk.
Brand: Quizplus
Rating: 4.8 (48 reviews)

Question

Quizplus · Accepted Answer

Currency swaps are subject to basis risk because the floating interest rates applied to the principal amounts exchanged can change differently, affecting the swap's value.

The Same Types of Risks That Apply to Interest Rate