A financial contract that obligates one party to exchange a set of payments it owns for another set of payments owned by another party is called a
A)hedge.
B)call option.
C)put option.
D)swap.

Question

Quizplus · Accepted Answer

A swap is a financial contract in which two parties agree to exchange a set of payments. This can be used for hedging purposes, but is not necessarily a hedge in and of itself. A call option gives the holder the right, but not the obligation, to buy an underlying asset at a specified price, while a put option gives the holder the right, but not the obligation, to sell an underlying asset at a specified price.

A Financial Contract That Obligates One Party to Exchange a Set