One of the key motives for a cross-currency swap is:
A) the need to evade the domestic country's regulations.
B) the need to obtain the actual use of the foreign currency.
C) to gain risk exposure.
D) to make money from interest rate differences between countries.

Question

Quizplus · Accepted Answer

A cross-currency swap is a financial instrument that allows the parties involved to exchange the principal and interest payments of two different currencies. One of the motives for entering into such an arrangement is to obtain the actual use of the foreign currency, which may be needed for business operations or investments. The other choices, such as evading regulations or gaining risk exposure, are not primary motives for a cross-currency swap. While making money from interest rate differences between countries can be a benefit of the swap, it is not the key motive.

One of the Key Motives for a Cross-Currency Swap Is