What Is a "Swap

question 33

Multiple Choice

What is a "swap"?

• A)A contract in which two parties agree to exchange cash flows (e.g.interest cash flows).
• B)A contract in which one party commits upfront to buy or sell commonly traded items at a defined price and maturity date.
• C)A contract in which one party commits upfront to buy or sell something at a defined price at a defined future date.
• D)A contact that gives the right,but not the obligation,to buy a share at a specified price over a specified period of time.

---

Definitions:

Consolidation

A combination of two or more businesses in which all of the old legal entities dissolve and a new one with a new name is formed to continue into the future.

Vertical Merger

A vertical merger occurs between two companies that operate at different levels within an industry's supply chain, typically aimed at increasing efficiencies or reducing costs.

Horizontal Merger

A business consolidation that occurs between companies operating in the same industry or production stage.

Conglomerate Merger

A merger between companies that operate in completely different industries, creating a conglomerate of businesses under one corporate group with diversified interests.