Which of the Following Describes a 3-Month Overnight Indexed Swap

question 20

Multiple Choice

Which of the following describes a 3-month overnight indexed swap (OIS) ?

• A) A fixed rate is exchanged for the overnight rate every day for three months
• B) LIBOR is exchanged for the overnight rate every day for three months
• C) The arithmetic average of overnight rates is exchanged for a fixed rate at the end of three months
• D) The geometric average of overnight rates is exchanged for a fixed rate at the end of three months

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Definitions:

Statement of Cash Flows

A summary indicating how balance sheet account changes and revenue fluctuations impact cash and equivalents, broken down into the segments of operating, investing, and financing.

Operating Section

Part of a financial statement that reports on the company's revenues and expenses related to its primary operations.

Investing Section

A part of the statement of cash flows that reports the purchase and sale of long-term investments and property, plant, and equipment, reflecting how the company invests its cash.

Financing Section

Part of the cash flow statement that records cash activities related to funding the company, such as obtaining loans or issuing stock.