A Firm Entering into a Currency or Interest Rate Swap

question 20

True/False

A firm entering into a currency or interest rate swap agreement holds no responsibility for the timely servicing of its own debt obligations since that responsibility now is born by the second party to the contract.

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Definitions:

Cash Flows

The inflow and outflow of cash and cash equivalents, representing the operating, investing, and financing activities of an entity over a period.

Indirect Method

In finance, it refers to a cash flow statement approach that adjusts net income for the effects of transactions that do not involve cash, to calculate net cash flow from operating activities.

Income Statement

A financial document that provides a summary of a company's revenues, expenses, and profits/losses over a specified period of time.

Net Cash

An accounting term that represents the amount of cash remaining after all operating, investing, and financing activities are accounted for in a given period.