Which of the following risks is NOT included in the evaluation for variable rate debt?

The evaluation of variable rate debt commonly involves several important risks that can impact the costs associated with such debt. Underwriting risk, while relevant to certain aspects of debt financing, does not specifically pertain to the characteristics and behaviors of variable rate debt.

Variable rate debt is characterized by interest rates that fluctuate based on market conditions, and this introduces several specific risks. Remarketing risk relates to the potential inability to successfully sell or reissue variable rate notes when they reach maturity. Tax compliance risk comes into play particularly for tax-exempt variable rate debt, where any changes in compliance can affect the attractiveness and legality of the debt. Rollover risk is the uncertainty associated with refinancing debt when it comes due, which can be particularly pertinent in a variable rate context as interest rates may change.

In contrast, underwriting risk concerns the process by which a financial institution evaluates and assumes the risk of providing funds for a borrower, rather than focusing on the ongoing management and implications of holding variable rate debt. As such, it is not typically considered a direct risk in the assessment of variable rate debt itself.