alleryStart learning →What do two parties agree to do under a swap contract?
ABuy an asset at a fixed future date
BIssue new shares to each other later
CPool capital into a common investment fund
DExchange one stream of cash flows for another
Answer & Solution
Correct answer: D. Exchange one stream of cash flows for another
A swap is a derivative whose core feature is a pair of cash flow streams that the parties trade according to an agreed formula.
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