Vidyalelo
Management · Q560

International Finance and Treasury

Graduate and Post Graduate · Management · question 560

Q560

Agreement between two parties to exchange cash flows in future and cash flows are based on underlying instruments is classified as

A.
swaps
Answer
B.
interchange
C.
exchange
D.
index

Answer: Option A

Solution

Answer: Option A
Solution:
Agreement between two parties to exchange cash flows in future and cash flows are based on underlying instruments is classified as swaps. A swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments.