easy · FRM Part 1 Financial Markets and Products
What is 'novation' in the context of centrally cleared swaps?
- The process of adjusting the swap rate to match current market conditions.
- The calculation of the net interest payment at the end of each period.
- The legal termination of a swap due to a counterparty default.
- The replacement of a bilateral contract with two separate contracts with a central counterparty (CCP).
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