A financial agreement between two parties to exchange a series of cash flows similar to those resulting from an exchange of different types of bonds is called a/an:
A) credit swap.
B) interest rate swap.
C) yield curve swap.
D) notional spread.

Question

Quizplus · Accepted Answer

An interest rate swap involves two parties exchanging cash flows, typically with one party making fixed payments and the other party making variable payments based on an underlying interest rate. This is a common way for companies to manage their interest rate risk and achieve their desired cash flow profile. Credit swaps, yield curve swaps, and notional spreads are all types of financial agreements, but they do not involve the exchange of cash flows similar to those resulting from an exchange of different types of bonds.

A Financial Agreement Between Two Parties to Exchange a Series