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

Question

Quizplus · Accepted Answer

A forward-forward lender is exposed to the risk of higher interest rates because they have committed to lending at a future date at a predetermined rate. If interest rates rise, they will receive less interest than the market rate.

A Forward-Forward Lender Has an Exposure to the Risk Of