An Agreement to Exchange Interest Payments Based on a Fixed

question 14

Multiple Choice

An agreement to exchange interest payments based on a fixed payment for those based on a variable rate (or vice versa) is known as a/an:

• A) forward rate agreement.
• B) interest rate future.
• C) interest rate swap.
• D) none of the above

---

Definitions:

Stock Repurchase

A situation where a company buys back its own shares from the marketplace, potentially increasing the value of remaining shares.

Stock Dividend

A dividend payment made in the form of additional shares rather than a cash payout.

Stock Split

An increase in a firm’s shares outstanding without any change in owner’s equity.