Exam 21: Interest Rates and Foreign Currency Swaps

Swaps provide a real economic benefit to the counterparties only if a barrier exists to prevent ________ from functioning fully.

The principal amount of the currencies in a currency swap is determined by ________ between the two parties to the swap.

A currency swap is most similar in economic purpose to a

The ________ is the conceptual principal amount that controls the cash flows of an interest ate swap.

The ________ is the conceptual principal amount that controls the cash flows of an interest rate swap.

The theoretical principal underlying the swap is termed the

Describe how the cash flows of swaps are similar in structure to the cash flow of bonds.

________ is the number of basis points that are added to the yield to maturity on a U.S.government bond corresponding to that maturity.

When a situation exists in which two corporations have headquarters in two different countries and each makes a loan of equivalent value to the subsidiary of the other company that operates in its country,we say ________ exists.

An interest rate swap allows an MNC to change the nature of its debt from a ________.

A currency swaps allows a multinational corporation to change the ________.