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      Question

      A contract requiring the exchange of a fixed-rate stream

      of cash flows in Currency A for a floating-rate stream of cash flows in Currency B is classified as a:Β 
      A Forward contract Correct Answer Incorrect Answer
      B Futures contract Correct Answer Incorrect Answer
      C Swap agreement Correct Answer Incorrect Answer
      D Option contract Correct Answer Incorrect Answer
      E Repo transaction Correct Answer Incorrect Answer

      Solution

      The continuous exchange of predictable obligations (fixed vs. floating streams) across different currencies is a foundational feature of a swap agreement. Unlike options or forwards which usually settle at a single maturity date, swaps involve multiple settlement dates over the life of the contract.

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