A Currency Swap Is Equivalent to a

question 16

Multiple Choice

A currency swap is equivalent to a

• A)currency option,with the exercise price equal to the current spot rate
• B)long-dated forward foreign exchange contract,where the forward rate is the current spot rate.
• C)interest rate swap,where the basis is the differential between the fixed and floating interest rates
• D)short-term currency futures contract

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Definitions:

Pharmaceutical Products

Medications and drugs developed for medical use to diagnose, treat, or prevent diseases.

Economic Profits

The excess of total revenues over total costs, including both explicit and implicit costs, indicating a return above the firm's opportunity costs.

Average Rate

The mean value of a set of rates or percentages, calculated as the sum of all rates divided by the number of rates.

Above Average Profits

Earnings that surpass the norm or average level within a particular industry or market.