Question
Magneto Investments is a European-based hedge fund that frequently invests in countries all over the world. Magneto's financial statements are reported in euros. Magneto recently
Magneto Investments is a European-based hedge fund that frequently invests in countries all over the world. Magneto's financial statements are reported in euros. Magneto recently entered into a swap agreement to pay ABC Bank a stream of U.S. dollar cash flows based on a 5% fixed rate in exchange for another stream of U.S. dollar cash flows based on 1 year LIBOR. The annual swap settlements are based on a $10 million principal amount. The swap agreement between Magneto and its counterparty is considered _______________________.
Group of answer choices
a credit default swap
a currency swap
an interest rate swap
an equity swap
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