A contract to sell a bond investment. Entities can buy the contract through an exchange. a.)Long forward contract b.)Variable-to-fixed interest rate swap c.)Short forward contract d.)Currency swap e.)Long futures contract f.)Fixed-to-variable interest rate swap g.)Short futures contract

A contract to sell a bond investment. Entities can buy the contract through an exchange. a.)Long forward contract b.)Variable-to-fixed interest rate swap c.)Short forward contract d.)Currency swap e.)Long futures contract f.)Fixed-to-variable interest rate swap g.)Short futures contract

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter24: Enterprise Risk Management

Section: Chapter Questions

Problem 1Q: Define each of the following terms: a. Derivatives b. Enterprise risk management c. Financial...

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Concept explainers

Swaps

A swap is a derivative contract in which two parties are agreed to exchange their cash flows from two different financial instruments for a defined period. In swap contracts, cash flows from one financial instrument are fixed and cash flow from other financial instruments is variable based on the interest rate, exchange rate, and commodity price. Swap contracts are transacted in an over-the-counter system. Swap contracts are utilized to hedge risk and mitigate loss.

Question

A contract to sell a bond investment. Entities can buy the contract through an exchange.

a.)Long forward contract

b.)Variable-to-fixed interest rate swap

c.)Short forward contract

d.)Currency swap

e.)Long futures contract

f.)Fixed-to-variable interest rate swap

g.)Short futures contract

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