The Foreign Exchange Swap Is a Combination of Spot and Forward

question 26

Multiple Choice

The foreign exchange swap is a combination of spot and forward transactions of the same amount of the currency delivered in two different dates and is ________.

• A) Completed when both parties pay a deposit.
• B) Adjusted at the midpoint of the contract.
• C) No longer used in financial markets.
• D) Executed in a single step.

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Definitions:

Current Tax Liability

The amount of income taxes a company is obligated to pay to governmental authorities within the next fiscal period.

Tax Deductible

Tax deductible refers to certain expenses or investments that can be subtracted from gross income to reduce the amount of income subject to tax.

Depreciation

The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value due to use and wear and tear.

Income Tax Rate

The percentage at which an individual or corporation is taxed on their income.