Generic Questions

Users should respond to the Generic Questions. The following table lists the Generic Questions and the expected answers.

Table 14-2 The Generic Based Questionnaire Table

Generic Questions	Answers	Comments
Were any of the hedged items bought at a heavy discount?	No	The expected answer is "No". If the answer is "Yes" or blank, this question will be valued as incorrect, while considering for Credit Risk Dominance Effectiveness.
Are the derivatives cash collateralized?	Yes	The expected answer is "Yes". If the answer is "No" or blank, this question will be valued as incorrect, while considering for Credit Risk Dominance Effectiveness.
Do any of the hedged items represent an inventory of forecast transactions?	No	The expected answer is "No". If the answer is "Yes" or blank, this question will be valued as incorrect, while considering for Credit Risk Dominance Effectiveness.
Is there a clause to call for highly liquid collateral in case of a rating downgrade or deterioration in financial position?	Yes	The expected answer is "Yes". If the answer is "No" or blank, this question will be valued as incorrect, while considering for Credit Risk Dominance Effectiveness.
Are there mutual master netting agreements?	Yes	The expected answer is "Yes". If the answer is "No" or blank, this question will be valued as incorrect, while considering for Credit Risk Dominance Effectiveness.
Does the derivative agreement impose an initial margin on both parties?	Yes	The expected answer is "Yes". If the answer is "No" or blank, this question will be valued as incorrect, while considering for Credit Risk Dominance Effectiveness.