ACI
3I0-013 · Question #128
In the weekend newspapers you read that one of your FX counterparties has gone into liquidation. You have no netting or close-out agreements in place with this counterparty and remember that you…
The correct answer is C. The loss of the negative mark-to-market value of the deal. See the full explanation below for the reasoning.
Question
In the weekend newspapers you read that one of your FX counterparties has gone into liquidation. You have no netting or close-out agreements in place with this counterparty and remember that you have one forward deal outstanding. What is the main risk affecting your bank?
Options
- AThe loss of the entire principal amount of the deal
- BThe"replacement risk", also known as"replacement-cost risk"
- CThe loss of the negative mark-to-market value of the deal
- DAs the deal is in the future, there is no impact on P&L
How the community answered
(64 responses)- A16% (10)
- B5% (3)
- C72% (46)
- D8% (5)
Community Discussion
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