A Swap Contract Is in Essence a Portfolio, or Series

question 11

Multiple Choice

A swap contract is in essence a portfolio, or series, of _________

• A)forward contracts.
• B)futures contracts.
• C)repurchase agreements.
• D)resettlement agreements.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its current assets.

Times Interest Earned

A ratio that assesses the risk that bondholders will not receive their interest payments or that interest payments will not be made if earnings decrease. The ratio is computed as income before income tax expense plus interest expense divided by interest expense.

Interest Expense

The cost incurred by an entity for borrowed funds, often reflected as a line item on the income statement.

Days' Sales

A financial metric that estimates the average time it takes for a company to convert its inventory into sales.