A swap is an arrangement for two counterparties to:
A)exchange cash flows over time.
B)permit fluctuation in interest rates.
C)help exchange markets clear.
D)All of the above.
E)None of the above.

Question

Quizplus · Accepted Answer

A swap is an arrangement for two counterparties to exchange cash flows over time. While swaps can be used to manage interest rate risk, and they do help exchange markets clear, the primary purpose of a swap is to exchange cash flows.

A Swap Is an Arrangement for Two Counterparties To