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Understanding Swaps Quiz

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1. What is a financial derivative contract known as a 'swap'?

2. What is the most common type of swap in the fiscal market?

3. In a plain vanilla swap, what do the two parties typically exchange?

4. Why might a company engage in a swap?

5. In a currency swap, what do the parties exchange?

6. What is the typical lifespan of a swap?

7. What is a credit default swap (CDS)?

8. In the context of a swap, what is 'notional principal'?

9. Who acts as the intermediary in a swap transaction?

10. What risk is inherent to most swaps?