In a currency swap, the interest payments and repayment of the principal are based on:
A) an exchange rate that is agreed upon in advance
B) the forward exchange rate
C) the expected spot exchange rate
D) the exchange rate prevailing when the payment is due

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In a currency swap, the interest payments and repayment of the principal amounts are based on an exchange rate that is agreed upon in advance. This fixed rate facilitates the exchange of currency flows between the parties involved, providing certainty and hedging against exchange rate fluctuations.

In a Currency Swap, the Interest Payments and Repayment of the Principal