In the context of managing exchange rate risks, which of the following statements is true of FX swaps?
A) The simultaneous purchase and sale of a given amount of currency is prohibited.
B) An option is provided to a buyer to purchase the right to buy a certain amount of currency at a given exchange rate.
C) A spot transaction is coupled with a forward transaction where both are completed at the same time.
D) The spot rate is a prediction of future forward rates so that a company can bypass uncertainty in the currency market.

Question

Quizplus · Accepted Answer

FX swaps involve a spot transaction coupled with a forward transaction, where both transactions are completed at the same time, allowing parties to manage exchange rate risks by locking in exchange rates for future transactions.

In the Context of Managing Exchange Rate Risks, Which of the Following