medium · FRM Part 1 Financial Markets and Products
A bank has a long position in a 5-year EUR/USD currency swap where it receives EUR fixed and pays USD fixed. If the USD interest rate rises while the EUR rate and the exchange rate remain constant, the value of the swap to the bank will:
- Decrease, because rising USD rates always hurt dollar-based banks.
- Decrease.
- Increase.
- Remain unchanged because the exchange rate is constant.
Sign up free to see the explanation and track your rank →
More FRM Part 1 Financial Markets and Products practice
- If the oil market shifts from backwardation to a persistent contango, which of the followi
- If at the time of delivery S_1 = $72 and F_1 = $74, while the hedge was entered at F_0 =
- According to the standard 'Default Waterfall' of a Central Counterparty (CCP), which layer
- A 'Fallen Angel' is a term used in the bond market to describe:
- A 'long' position in which of the following provides insurance against a rise in prices?
- An American put option is deep in the money. Why might it be optimal to exercise this opti
- If at maturity the futures price were significantly higher than the spot price, what would
- How is the 'swap rate' typically determined at the inception of an interest-rate swap?