When two parties exchange their respective interest payments associated with existing debt borrowed in the capital markets,this is called a/an:
A) interest exchange.
B) financial switch.
C) swap.
D) financial transfer.

Question

Quizplus · Accepted Answer

The activity described in the question is a swap, which involves two parties exchanging their respective interest payments associated with existing debt borrowed in the capital markets. Choice A, interest exchange, is too generic and does not specifically describe this activity. Choice B, financial switch, is not a commonly used term in finance and does not accurately describe this activity. Choice D, financial transfer, is also too broad and does not specifically refer to the exchange of interest payments in the capital markets.

When Two Parties Exchange Their Respective Interest Payments Associated with Existing