A Fixed-For-Fixed Currency Swap

question 7

Multiple Choice

A fixed-for-fixed currency swap

• A) Is equivalent to a portfolio of FRAs
• B) Is equivalent to a long position in one bond and a short position in another bond
• C) Is worth the same whether or not principals are exchanged
• D) Involves no exchange of principals at the beginning of its life

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Definitions:

Association

In statistics, it refers to any relationship or correlation between two or more variables.

Null Hypothesis

A default statement in statistics that there is no significant effect or no difference, usually set as the assertion to be tested.

Chi-Square Test

A statistical test used to determine if a significant difference exists between the expected frequencies and the observed frequencies in one or more categories.

Independence

The state of being free from outside control or influence; in statistics, it refers to the scenario where the occurrence of one event does not affect the probability of another.