NACVA Exam CVA Topic 6 Question 29 Discussion

Actual exam question for NACVA's CVA exam

Question #: 29
Topic #: 6

In setting the interest rate in Buy-Sell agreement, we face the problem that market interest rates fluctuate considerably over time, and we have no way of knowing at what time in the future the Buy-Sell transaction will be triggered nor what the market level of interest rates will be at that time. There are several possible approaches to dealing with this dilemm a. One approach is

ASimply to agree on an interest rate despite these uncertainties

BTo set the interest rate by trying it to some index of interest rates

CMight be appropriate to use an interest rate index that represents securities

DSpread out the tax on the seller's gain

Show Suggested Answer

Suggested Answer: A, B

by Katina at May 08, 2022, 06:18 PM

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