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NEW QUESTION: 1
Which of the following statements apply to an FX Swap?
A. It fully eliminates counterparty risk.
B. It replaces a pair of foreign exchange transactions.
C. It reduces credit risk with the counterparty, as compared to money market deals.
D. It consists of two separate transactions, dealt with two different counterparties.
Answer: C

NEW QUESTION: 2
Which of the following are not of Basic types of non-sharable problems?
A. Physical Isolation
B. Business reversals
C. Violation of ascribed obligations
D. Larceny by Fraud
Answer: D

NEW QUESTION: 3
[According to the PRMIA study guide for Exam 1, Simple Exotics and Convertible Bonds have been excluded from the syllabus. You may choose to ignore this question. It appears here solely because the Handbook continues to have these chapters.] The price of an 'out-of-the-money' convertible security is affected by:
I. Changes in interest rates
II. Changes in the issuer's credit risk
III. Changes in the issuer's share price
IV. Changes in the implied volatility of the issuer's share price
A. III and IV
B. I and II
C. I, III and IV
D. All of the above
Answer: B
Explanation:
Explanation
An out of the money convertible security behaves just like a regular debt security as the option is near worthless. Therefore it is affected by changes in interest rates and the credit risk of the issuer, and unaffected by changes in the prices or volatility of the issuer's shares (the underlying).