A swap used to hedge against exchange rate risk from mismatched currencies on assets and liabilities is
A)a commodity swap.
B)a credit swap.
C)a currency swap.
D)an equity swap.
E)an interest rate swap.

Question

Quizplus · Accepted Answer

A currency swap is specifically designed to hedge against exchange rate risk from mismatched currencies on assets and liabilities. The other options are swaps used for different purposes. Commodity swaps are used to hedge against price risk for commodities, credit swaps are used to transfer the credit risk of a debt obligation to another party, equity swaps are used for exchanging equity exposures, and interest rate swaps are used to manage interest rate risk.

A Swap Used to Hedge Against Exchange Rate Risk from Mismatched