Question: A risk manager at a large macro hedge fund is worried about various risk exposures at the Fund. The risk manager will use the interest

A risk manager at a large macro hedge fund is worried about various risk exposures at the Fund. The risk manager will use the interest rate swap market (IRS) to hedge or transform certain risks.

Market: An active, highly liquid interest rate swap market exists and is easily accessible.

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Swap agreements also come with risks One notable risk is that of counterparty risk Because the parti... View full answer

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