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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Definitions:

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, engaged in commercial, industrial, or professional activities.

Abusive Supervisors

Managers or superiors who engage in persistent patterns of mistreatment towards their subordinates.

Higher Management

Senior-level executives or administrators in an organization responsible for making strategic decisions and overseeing overall operations.

Team Player

One who emphasizes group accomplishment and cooperation rather than individual achievement and not helping others.