In the derivative markets a swap is:
A) another name for a call option.
B) another name for a put option.
C) an agreement between two or more persons to exchange cash flows over some future period.
D) the name for the exchange of a futures contract for an option contract.

Question

Quizplus · Accepted Answer

A swap is an agreement between two or more parties to exchange cash flows over a future period. It involves exchanging one set of cash flows for another, such as fixed interest payments for floating interest payments. Swaps are common in derivative markets and are used to manage interest rate, currency, or credit risk. A swap is not the same as a call or put option, and it does not involve the exchange of futures and options contracts.

In the Derivative Markets a Swap Is