A forward-forward loan creates an exposure to the risk of:
A) Higher interest rates
B) Lower interest rates
C) Steepening yield curve
D) Parallel shift downwards in the yield curve

Question

Quizplus · Accepted Answer

A forward-forward loan involves borrowing at a fixed rate for a future period. Therefore, if interest rates rise during that period, the borrower will be exposed to the risk of having to make payments at a higher rate.

A Forward-Forward Loan Creates an Exposure to the Risk Of