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NEW QUESTION: 1
Which of the following represents a riskier exposure for a bank: A LIBOR based loan, or an Overnight Indexed Swap? Which of the two rates is expected to be higher?
Assume the same counterparty and the same notional.
A. A LIBOR based loan; OIS rate will be higher
B. Overnight Index Swap; LIBOR rate will be higher
C. Overnight Index Swap; OIS rate will be higher
D. A LIBOR based loan; LIBOR rate will be higher
Answer: D
Explanation:
Explanation
A LIBOR based loan requires cash to move from the lender to the borrower in the amount of the notional. The Overnight Index Swap requires only the exchange of interest payments, and therefore represents less risk.
Therefore the LIBOR based loan is a riskier exposure.
The LIBOR is generally higher than the OIS. In fact, the difference between the two, the LIBOR-OIS spread, is a standard measure of the risk premium in the market that goes up when the risk of default by counterparty banks is considered high. This is because when the market perceives the risk of default to be high, the participants need a risk premium to take on the default risk which is considerably lesser with the OIS.
NEW QUESTION: 2
Reliability Growth is:
I. Often mathematically modeled with the Duane or AMSSA approaches.
II. The existence of more than one means for accomplishing a given functions.
III. Improvement of a reliability parameter by correcting deficiencies in the design.
Response:
A. I and III only
B. I and II only
C. III only
D. II only
Answer: A
NEW QUESTION: 3
Welches der folgenden Tools oder Techniken wird beim Verwalten des Qualitätsprozesses verwendet?
A. Kontrollkarte
B. Besprechungen
C. Expertenurteil
D. Audits
Answer: D