A major that can be eliminated through a swap is exchange rate risk.
A)But only to the extent that a foreign counterparty will not default in a currency swap.
B)But only if the bid-ask spreads are wide.
C)But swaps can be less efficient in this than just trading at the expected spot exchange rates each year.
D)none of the options

Question

Quizplus · Accepted Answer

Currency swaps can mitigate exchange rate risk, but their effectiveness is contingent on the foreign counterparty fulfilling their obligations and not defaulting.

A Major That Can Be Eliminated Through a Swap Is