The Primary Reasons for a Counterparty to Use a Currency

question 9

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)a and b

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Definitions:

Study Disclosure

The act of informing participants about the nature, purpose, and potential risks of a research study before their participation.

Systematic Observations

Carefully planned and structured methods of collecting data by watching subjects in a specific setting.

Phenomenon Understanding

The comprehension or insight into events or occurrences that are observable, often leading to new knowledge or scientific discoveries.

Negative Correlation

A relationship between two variables in which one variable increases as the other decreases.