_____ is defined as the conversion of one currency into another at Time 1,with an agreement to revert it back to the original currency at a specific Time 2 in the future.
A) Currency swap
B) Currency hedging
C) Spot transaction
D) Forward transaction

Question

_____ is defined as the conversion of one currency into another at Time 1,with an agreement to revert it back to the original currency at a specific Time 2 in the future.
A) Currency swap 
B) Currency hedging 
C) Spot transaction 
D) Forward transaction

Quizplus · Accepted Answer

Currency swap involves the exchange of currencies at a predetermined exchange rate, with an agreement to reverse the exchange at a future date. This is a common tool used by companies to manage their foreign exchange risks and ensure they can meet their obligations in different currencies. Spot transaction involves the immediate exchange of currencies at the prevailing exchange rate, while forward transaction involves the exchange of currencies at a predetermined exchange rate for settlement at a future date. Currency hedging is a broader term that refers to a range of strategies used to manage foreign exchange risks, including currency swaps and forward contracts.

_____ Is Defined as the Conversion of One Currency into Another