A Swap That Technically Is a Succession of Forward Contracts

question 71

Multiple Choice

A swap that technically is a succession of forward contracts on interest rates is

• A)a commodity swap.
• B)a credit swap.
• C)a currency swap.
• D)an equity swap.
• E)an interest rate swap.

Recognize the importance of accounting for the time value of money in investment decisions.

Grasp the principles of capital rationing and its application in prioritizing investment projects.

Differentiate among various capital investment analysis methods and their applications.

Understand different political orientations and how they shape societal values and government actions.

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Definitions:

Home Currency Approach

A method used in international finance to evaluate investments by converting all values to one's own currency.

NPV

Net Present Value, a method used in capital budgeting to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Yen Cash Flows

Cash flows related to financial transactions denominated in Japanese yen.

Absolute Purchasing Power Parity

A theory that states that the price of goods in different countries should be equal when measured in a common currency.