Which of the Following Best Describes a Total Return Swap

question 3

Multiple Choice

Which of the following best describes a total return swap?

• A) It exchanges the realized return on an asset, including both income and capital gains/losses, for a return, equal to LIBOR plus a spread on the initial value of the asset
• B) It exchanges the promised return on an asset, including both income and capital gains/losses, for a return equal to LIBOR plus a spread on the initial value of the asset
• C) It exchanges the realized return on an asset, including income but not capital gains/losses, for a return equal to LIBOR plus a spread on the initial value of the asset
• D) It exchanges the promised return on an asset, including income but not capital gains/losses, for a return equal to LIBOR plus a spread on the initial value of the asset

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Definitions:

Dominant Group

A social group that possesses the greatest power, resources, and social status within a society, exerting control and setting standards.

Marginalized Member

An individual or group that is pushed to the fringe of society and deprived of social and economic participation, often due to factors like race, gender, or economic status.

Equality

Fairness and justice achieved through same treatment.

Tokenism

The practice of making only a perfunctory or symbolic effort to be inclusive to members of minority groups, especially by recruiting a small number of people from underrepresented groups in order to give the appearance of equality within a workforce.