When two parties exchange the respective interest payments associated with existing debt borrowed in the capital markets,this is called a/an:
A) interest exchange.
B) financial switch.
C) swap.
D) financial transfer.

Question

Quizplus · Accepted Answer

The term used to describe the exchange of interest payments in capital markets is a swap. This is a contractual agreement between two parties to exchange cash flows over a specified period of time. It allows the parties to manage their interest rate exposure or obtain a lower interest rate than would be available without the swap.

When Two Parties Exchange the Respective Interest Payments Associated with Existing