Exam 8006 Topic 3 Question 44 Discussion

Actual exam question for PRMIA's 8006 exam
Question #: 44
Topic #: 3
Which of the following statements are true:
I. The swap rate, also called the swap spread, is initially calculated so that the value of the swap at inception is zero.
II. The value of a swap at initiation is different from zero and is equal to the difference between the NPV of the cash flows of the two legs of the swap III. OTC swaps are standardized and limited to a defined set of standard contracts IV. Interest rate and commodity swaps are the types of swaps that are most traded

Suggested Answer: C Vote an answer

Explanation
Swaps rates are calculated such that the swap's value at inception is zero. Therefore statement I is correct and statement II is incorrect. OTC swaps are not standardized, in fact they are customized by the parties to suit their needs, which is why they are over-the-counter. Therefore statement III is incorrect. It is correct that interest rate and commodity swaps are the most traded, and statement IV is correct.
Therefore Choice 'c' is the correct answer.

by Suzanne at Jun 07, 2026, 12:00 PM

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