1. An equity swap is an agreement to

		(a) Exchange one stock for another on a specified date in the future.
		(b) Exchange equity in a company for debt in the same company.
		(c) Exchange returns on a specified equity or equity index periodically for a specified stream of returns (e.g., Libor or the return on another equity or equity index).
		(d) Exchange the equity of a given company or an equity index for long-dated Treasury debt.

2. A fund that is all invested in U.S. equities seeks exposure to foreign equity markets. Which of the following is the most appropriate approach for the fund to take? (MSCI World is an index that tracks the performance of equity markets in 24 countries.)

		(a) Enter into an equity swap to pay the return on the S&P 500 and receive the return on the MSCI World index.
		(b) Enter into an equity swap to receive the return on the S&P 500 and pay the return on the MSCI World index.
		(c) Go short forward contracts on the MSCI World index.
		(d) Enter into forward exchange contracts to sell the dollar and buy euros.

3. A variable notional equity swap differs from a fixed notional equity swap in that

		(a) The variable notional swap involves a principal that, like an amortizing swap, decreases from period to period in a predetermined manner.
		(b) The variable notional swap involves a principal that changes from period to period depending on realized returns on the underlying equity or equity index.
		(c) The variable notional swap involves a principal that changes from period to period depending on realized Libor rates during the receding period.
		(d) In a variable notional swap, the receiver of equity returns can choose whether to pay Libor or the returns on a specified broad market index on each payment date.