The Primary Reasons for a Counterparty to Use a Currency

question 18

Multiple Choice

The primary reasons for a counterparty to use a currency swap are:

• A) to hedge and to speculate.
• B) to play in the futures and forward markets.
• C) to obtain debt financing in the swapped currency at an interest cost reduction brought about through comparative advantages each counterparty has in its national capital market, and the benefit of hedging long-run exchange rate exposure.
• D) to gamble in the futures and forward markets.

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