Which of the Following Is an Example of a "Swap

question 6

Multiple Choice

Which of the following is an example of a "swap"?

• A)Right to buy 100 shares of CIBC over the next 5 years.
• B)Commitment to buy 100 barrels of oil next month at $125/barrel.
• C)Commitment to buy $100,000 US dollars in 4 months at US$=1.10.
• D)Pay interest at prime +3% in exchange for receiving interest at 5%.

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Definitions:

Cash Dividends

Profits paid by a corporation to its shareholders in the form of cash.

Free Cash Flow

The amount of cash a company generates after accounting for capital expenditures, effectively showing the liquidity available for expansion, dividends, or debt repayment.

Net Income

Represents the total earnings of a company, calculated as the revenues minus the expenses, taxes, and costs.

Capital Expenditures

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.