24-55 What is the special feature of an off-market swap arrangement?
A)It involves special nonstandard considerations that must be negotiated between the parties.
B)The swap is used to hedge against exchange rate risk from mismatched currencies on assets and liabilities.
C)It involves additional financing costs resulting from the fixed-fixed currency swap.
D)It involves an obligation to pay interest at a fixed or floating rate for payments representing the total return on a specified amount.
E)FI receives the par value of the loan on default in return for paying a periodic swap fee.

Question

Quizplus · Accepted Answer

An off-market swap arrangement is unique and not standard, so negotiations are required between the parties to define the terms of the swap. This can include differences in the notional amount, payment frequency, or the reference rate used in the swap agreement.

24-55 What Is the Special Feature of an Off-Market Swap