PRMIA Exam 8010 Topic 1 Question 18 Discussion

Actual exam question for PRMIA's 8010 exam

Question #: 18
Topic #: 1

[All 8010 Questions]

Which of the following is NOT true in respect of bilateral close out netting:

AThe net amount due is immediately receivable or payable

BAll transactions are immediately closed out upon the occurrence of a credit event for either of the counterparties

CAll transactions are netted against each other

DTransactions are separated by transaction type and immediately settled separately at each's replacement value

Show Suggested Answer

Suggested Answer: D

Choice 'b', Choice 'c' and Choice 'a' correctly describe a bilateral close out netting as recommended by the ISDA. However Choice 'd' is not correct as it suggests individual settlement of transactions without netting which is the whole point of bilateral close out netting.

by Paris at Sep 21, 2022, 07:07 PM

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