A Floating for Floating Currency Swap Is Equivalent to

question 17

Multiple Choice

A floating for floating currency swap is equivalent to

• A) Two interest rate swaps, one in each currency
• B) A fixed-for-fixed currency swap and one interest rate swap
• C) A fixed-for-fixed currency swap and two interest rate swaps, one in each currency
• D) None of the above

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Definitions:

DCF Approach

A valuation method that estimates the value of an investment based on its expected future cash flows, adjusted for the time value of money.

Cost of Equity

The return that investors expect for investing in a company's equity, considering the risk of the investment.

Retained Earnings

The portion of a company's profits that is kept or retained for reinvestment in the business, rather than being paid out as dividends.

Retained Earnings

Portion of a company's profits that is kept or retained within the company, rather than paid out to shareholders as dividends, for reinvestment in the business or to pay off debt.