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True or false: A swap contract can allow a firm to modify existing asset or liability...

True or false: A swap contract can allow a firm to modify existing asset or liability cash-flows from one currency to another currency and from variable to fixed (or vice versa).

True or false: A series of options negotiated together rather than individually is a swap contract.

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Answer #1

1. True. A Swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments.

2. False. A Swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments. one of the type of swap contact is swaption also known as swap option, refers to an option to enter into a interest rate swap or some other type of swap. In exchange for an option premium, the buyer gains the right but not an obligation to enter into a specified swap agreement with the issuer.

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