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:

Thumb

The first digit located on the lateral side of the hand, important for gripping and manipulating objects.

Olecranon Process

The pointed bone at the upper end of the ulna, around which the elbow joint forms and functions.

Musculocutaneous Nerve

A nerve in the arm that innervates the muscles of the anterior compartment of the forearm and provides sensation to the skin over the lateral aspect of the forearm.

Forced Expiration

The act of expelling air from the lungs with effort beyond normal exhalation.