Which of the following is not a similarity among interest rate swaps, financial futures and FRAs.
A) Each contract allows managers to alter a bank's interest rate risk exposure.
B) None of the contracts require much of an initial cash commitment.
C) Each contract provides for cash receipts or payments depending on how interest rates move.
D) Parties negotiate the notional principal amounts for each contract.
E) All of the above are similarities among interest rate swaps, financial futures and FRAs.

Question

Quizplus · Accepted Answer

The notional principal amounts for financial futures are standardized and not negotiated by the parties, unlike in interest rate swaps and FRAs where the notional amounts can be negotiated.

Which of the Following Is Not a Similarity Among Interest