Question $1($Mandatory$)(1$ point$)$

Say you are a bank and want to reduce the duration of your assets. One way of doing so would be to use an interest rate swap to change the payments you receive from fixed to floating rate.

True

False

Question $2($Mandatory$)(1$ point$)$

A credit default swap $($CDS$)$ is a privately negotiated contract which you can use to:

hedge prepayment risk on a pool of mortgages.

hedge default risk on fixed income assets.

hedge interest rate risk on fixed income assets.

hedge exchange rate risk on euroyen deposits:

Question $3($Mandatory$)(1$ point$)$

To buy CDS on a fixed income asset you must own the asset.

True

False