Which of the Following Is the Best Definition of Swap

question 156

Multiple Choice

Which of the following is the best definition of swap contract?

• A) A plot showing the gains and losses that will occur on a contract as the result of unexpected price changes.
• B) An option that gives the owner the right, but not the obligation, to sell an asset.
• C) A plot showing how the value of the firm is affected by changes in prices or rates.
• D) An agreement by two parties to exchange, or swap, specified cash flows at specified intervals in the future.
• E) Short-run financial risk arising from the need to buy or sell at uncertain prices or rates in the near future.

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Definitions:

Mean

The average of a set of numbers, calculated by adding all the values together and dividing by the number of values.

Sample Mean

Mean calculated from data for a sample.

Confidence Interval

A set of values, taken from sampled data, that potentially covers the value of an unknown parameter of the population.

Mean Score

The average value calculated by adding all individual scores and dividing by the number of scores.