Q68
Agreement to exchange one currency for another at a specified exchange rate and date is
A.
Currency swap
AnswerB.
Swap points
C.
Currency put option
D.
Currency call option
Answer: Option A
Solution
Answer: Option A
Solution:
Agreement to exchange one currency for another at a specified exchange rate and date is Currency swap. A currency swap is an agreement in which two parties exchange the principal amount of a loan and the interest in one currency for the principal and interest in another currency. At the inception of the swap, the equivalent principal amounts are exchanged at the spot rate.