- CFA Exams
- CFA Level I Exam
- Study Session 12. Fixed Income (1)
- Reading 32. The Term Structure and Interest Rate Dynamics
- Subject 4. The Swap Curve (LIBOR Curve)
CFA Practice Question
The swap curve plots maturity (or length) of the swap against the fixed rate you will have to pay/receive if you enter into the swap. The swap spread primarily reflects:
B. credit risk.
C. interest rate risk.
A. liquidity risk.
B. credit risk.
C. interest rate risk.
Correct Answer: B
It reflects the risk of the counterparty to the swap failing to satisfy its obligations.
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