Swap Transactions

question 16

Multiple Choice

Swap transactions

• A)involve the simultaneous sale (or purchase) of spot foreign exchange against a forward purchase (or sale) of approximately an equal amount of the foreign currency.
• B)account for about half of Interbank FX trading.
• C)involve trades of one foreign currency for another without going through the U.S. dollar.
• D)all of the above

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Definitions:

User Cost

The opportunity cost of using a good, service, or resource, including the cost of foregoing the next best alternative use.

Extraction Cost Curve

Illustrates the relationship between the quantity of a resource extracted and the cost of extraction, typically showing increasing costs as more of the resource is extracted.

Marginal Extraction Costs

The additional costs incurred for extracting one more unit of a resource, which may increase as the resource becomes scarcer.

Resource

Assets, materials, or substances that provide economic value or benefit to individuals or businesses.