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pricing simultaneous transactions and to decompose a total CVA into its trade-level contributions Which of the above statements are (is) TRUE? a) Neither b) l. only

pricing simultaneous transactions and to decompose a total CVA into its trade-level contributions Which of the above statements are (is) TRUE? a) Neither b) l. only

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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6. Your colleague Peter is evaluating whether to use marginal or incremental CVA. He makes the following I. Incremental CVA depends on the order in which trades are executed but does not change due to subsequent trades. It makes the most sense when CVA needs to be charged to individual traders and businesses. II. Marginal CVA does change when new trades are executed. While it probably should not be used to price new transactions, it is good for pricing simultaneous transactions and to decompose a total CVA into its trade-level contributions Which of the above statements are (is) TRUE? a) Neither b) l. only c) II. Only d) Both
Transcribed Image Text:6. Your colleague Peter is evaluating whether to use marginal or incremental CVA. He makes the following I. Incremental CVA depends on the order in which trades are executed but does not change due to subsequent trades. It makes the most sense when CVA needs to be charged to individual traders and businesses. II. Marginal CVA does change when new trades are executed. While it probably should not be used to price new transactions, it is good for pricing simultaneous transactions and to decompose a total CVA into its trade-level contributions Which of the above statements are (is) TRUE? a) Neither b) l. only c) II. Only d) Both
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