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Basic Question 6 of 12

The swap spread provides an indication of investors' required return for:

I. interest rate risk.
II. credit risk.
III. liquidity risk.
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User Contributed Comments 1

User Comment
CFAJ why liquidity risk?
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I was very pleased with your notes and question bank. I especially like the mock exams because it helped to pull everything together.
Martin Rockenfeldt

Martin Rockenfeldt

Learning Outcome Statements

explain the swap rate curve and why and how market participants use it in valuation;

calculate and interpret the swap spread for a given maturity;

describe short-term interest rate spreads used to gauge economy-wide credit risk and liquidity risk;

CFA® 2025 Level II Curriculum, Volume 4, Module 26.