The Primary Reasons for a Counterparty to Use a Currency

question 21

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)both a and b

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Definitions:

Maturity

The state of being fully developed in body or mind, or achieving a state of full development and readiness.

Puberty

The developmental stage where an individual undergoes physical changes leading to sexual maturity and reproductive capability.

Vygotsky's Theory

A cognitive development theory proposed by Lev Vygotsky, which emphasizes the roles of social interaction and culture in the development of cognition and learning.

Piagetian Theory

A theory of cognitive development that describes how children construct a mental model of the world around them in distinct stages of cognitive development.