A total return swap is best described as
A)A swap in which the payments include only capital gains
B)a swap in which the total return on a stock index is swapped for the total return on a bond
C)a swap in which the return on one bond is swapped for some other payment
D)a swap designed to substitute for a basis swap
E)none of the above

Question

Quizplus · Accepted Answer

A total return swap involves swapping the total return of one asset, such as a bond, for another payment, which could be a fixed or floating rate.

A Total Return Swap Is Best Described as