With regard to a swap bank acting as a dealer in swap transactions,interest rate risk refers to
A) the risk that arises from the situation in which the floating-rates of the two counterparties are not pegged to the same index.
B) the risk that interest rates changing unfavorably before the swap bank can lay off to an opposing counterparty on the other side of an interest rate swap entered into with the first counterparty.
C) the risk the swap bank faces from fluctuating exchange rates during the time it takes for the bank to lay off a swap it undertakes with one counterparty with an opposing transaction.
D) the risk that a counterparty will default.
Correct Answer:
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