Which of the following is not true of hedged cross-currency equity swaps?
A) The hedged-cross currency equity swap pre-specifies a fixed exchange rate at which all cash flows (including principal) will be converted into the investor's currency.
B) The hedged-cross currency equity swap pre-specifies a fixed exchange rate at which all cash flows (except the principal) will be converted into the investor's currency.
C) In a hedged currency swap, the investor is fully hedged against exchange rate changes.
D) None of the above.

Question

Which of the following is not true of hedged cross-currency equity swaps? 
A) The hedged-cross currency equity swap pre-specifies a fixed exchange rate at which all cash flows (including principal) will be converted into the investor's currency.
B) The hedged-cross currency equity swap pre-specifies a fixed exchange rate at which all cash flows (except the principal) will be converted into the investor's currency.
C) In a hedged currency swap, the investor is fully hedged against exchange rate changes.
D) None of the above.

Quizplus · Accepted Answer

Hedged-cross currency equity swaps pre-specify a fixed exchange rate at which all cash flows will be converted into the investor's currency, INCLUDING the principal. Therefore, the statement in option B is false.

Which of the Following Is Not True of Hedged Cross-Currency