Q598
Swaps that are classified as long term contracts are
A.
currency swaps
AnswerB.
notion swaps
C.
floating swaps
D.
fixed swaps
Answer: Option A
Solution
Answer: Option A
Solution:
Swaps that are classified as long term contracts are currency swaps. 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.