CF abd MV Risk

any good practice questions anyone came across related to market value and cash flow risk? this is related to fixed and floating swaps. prime material for a bank IPS.

Pm section of Schweser exam 3 vol. 1 had a question on this.

jorgeam86 Wrote: ------------------------------------------------------- > Pm section of Schweser exam 3 vol. 1 had a > question on this. That was one of the worst questions I have ever seen.

Paraguay Wrote: ------------------------------------------------------- > jorgeam86 Wrote: > -------------------------------------------------- > ----- > > Pm section of Schweser exam 3 vol. 1 had a > > question on this. > > That was one of the worst questions I have ever > seen. > > Selling a payer swaption actually creates both > market and cash flow risk. I know I re-read the question 3 times bc it didnt make any sense to sell the payer swaption.

so did y’all see any good questions then?

Selling payer swaption creates cash flow and market risk. The only way to limit one or the other is to buy an option or enter a swap. Selling an option allows exercise by someone else at anytime creating both risks.

coolness. i wont break my head on this topic anymore