Financial contracts in which two parties trade interest payment streams to guarantee that the inflows of payments will more closely match the outflows are often referred to as
A)collateralized mortgage obligations.
B)retail sweep accounts.
C)securitizations.
D)swaps.

Question

Quizplus · Accepted Answer

Financial contracts in which two parties trade interest payment streams to guarantee that the inflows of payments will more closely match the outflows are called swaps. Collateralized mortgage obligations (CMOs) are securities backed by a pool of mortgage loans, while retail sweep accounts are offered by banks to automatically sweep excess funds from a customer's checking account into an interest-earning account. Securitizations involve pooling assets and turning them into securities to sell to investors.

Financial Contracts in Which Two Parties Trade Interest Payment Streams