A transaction in which two firms trade individual financing advantages to produce more favorable borrowing terms for each is known as a(n):

Question

Quizplus · Accepted Answer

An interest rate swap involves two firms trading individual financing advantages to produce more favorable borrowing terms for each other. A sequential short hedge and cross hedge, on the other hand, are both hedging strategies used to mitigate risk in market fluctuations. Therefore, the correct answer is A, as it is the only option that correctly describes the given transaction.

A Transaction in Which Two Firms Trade Individual Financing Advantages