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Which of the following refers to the simultaneous purchase and sale of a given amount of...

Which of the following refers to the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates?

Currency pairing

Carry trade

Currency exchange

Currency swap
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Answer #1

Answer: (d) Currency swap

Explanation: Currency swap, also known as cross-currency swap, is a financial transaction in which two parties exchange principal and interest in two different currencies. Usually, the parties involved in currency swap are large financial institutions. These institutions may either represent themselves or act as an agent to another (non-financial) organization. Currency swap involves simultaneous purchase and sale of a certain amount of foreign exchange for two value dates. One example of a currency swap is spot against forward.

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