A Major That Can Be Eliminated Through a Swap Is

question 18

Multiple Choice

A major that can be eliminated through a swap is exchange rate risk.

• A)But only to the extent that a foreign counterparty will NOT default in a currency swap.
• B)But only if the bid-ask spreads are wide.
• C)But swaps can be less efficient in this than just trading at the expected spot exchange rates each year.
• D)None of the above

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