In order to reduce interest rate swap risk exposures,a financial intermediary may:
A) practise marking-to market.
B) use margin calls.
C) ask for security collateral.
D) do all of the given answers.

Question

Quizplus · Accepted Answer

In order to effectively reduce interest rate swap risk exposures, a financial intermediary must use multiple methods. Practicing marking-to-market will help to ensure that values are accurately represented on a daily basis, allowing any necessary actions to be taken in a timely manner. By using margin calls, the intermediary can require counterparties to put up additional collateral if the value of the swap moves against them. And by asking for security collateral, the intermediary can further protect themselves against losses. Therefore, all of the given answers are the best choice to reduce interest rate swap risk exposures.

In Order to Reduce Interest Rate Swap Risk Exposures,a Financial