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:

Behaviorism

A theory of learning which states that all behaviors are acquired through conditioning processes influenced by the environment, without the need for internal thoughts or feelings.

Psychoanalysis

A therapeutic approach and theory of psychotherapy developed by Sigmund Freud that emphasizes the role of unconscious factors in driving human behavior.

Freud

Sigmund Freud was a neurologist and the founder of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Observable Behavior

Actions or reactions of an individual in various situations that are visible and measurable, often used in behavioral psychology for analysis.