Schweser V2 page 280 second afternoon exam Q22, I feel that by dealing with SPV, credit risk is transferred to SPV, so SPV will bear the risk, I have the opinion that without creating spv, how can you doing business with SPV? Also by total return SWAP, I receive the floating, so does it mean we have to pay fixed in total return SWAP, can we pay floating?
which edition? i have 2011…the questions are different…
2012 version, it appear on 2011 version as well, the question is ask you to choose the ways to reduce credit risk, create a spv is not a way to reduce credit risk according to the answer, I have different opinion
I may try to answer but question # are different. Though i remember this one.
Text says company could reduce the credit risk by creating a SPV.
In the context of the question, the dealer is involved. A Dealer would preferably do business with a SPV…