CVA Exam Dumps | In setting the interest rate in Buy-Sell agreement, we face the problem that market interest rates fluctuate

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Question 12/251

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 dilemma. One approach is

A. Spread out the tax on the seller's gain

B. Might be appropriate to use an interest rate index that represents securities

C. To set the interest rate by trying it to some index of interest rates

D. Simply to agree on an interest rate despite these uncertainties

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Question 12/251

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