Which of the Following Statements About Diff Swaps Is True

question 22

Multiple Choice

Which of the following statements about diff swaps is true?

• A)they involve interest payments in separate currencies
• B)they are based on the difference between interest rates in two countries
• C)they are based on the difference between interest rates of different maturities
• D)the notional principal reduces throughout the life of the swap
• E)the notional principal increases throughout the life of the swap

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Definitions:

Reacquired Shares

Shares that were previously issued and have been bought back by the issuing company, reducing the amount of outstanding stock on the open market.

Common Stock

A type of security that represents ownership in a corporation, with holders possibly entitled to dividends and voting rights.

Cumulative Preferred Stock

A type of preferred stock that accrues dividends in case they are not paid as scheduled, ensuring that dividends are paid out before any dividends can be issued to common stock shareholders.

Dividends Per Share

The total amount of dividends declared by a company for each share of stock held.