Which Statement Is INCORRECT

Multiple Choice

Which statement is INCORRECT?

A) Pricing swap default risk is adding a premium on the fixed rate to compensate the receiver of the . fixed payments for the risk arising from the possibility that the other party may default.
B) In practice, counterparties may seek to mitigate risk rather than price it.
C) A common method of mitigating risk is to ration the amount of swaps with any one counterparty.
D) It is not possible to model the magnitude of potential default risk.