Connect 1 Semester Access Card for Fundamentals of Corporate Finance
Connect 1 Semester Access Card for Fundamentals of Corporate Finance
11th Edition
ISBN: 9781259289392
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 23, Problem 9CRCT
Summary Introduction

To discuss: The reason to call a swap agreement is a series of forward contracts and the nature of default risks if a firm enters into a swap agreement with a swap dealer.

Introduction:

A swap contract is an emerging derivative instrument, which was introduced in the year 1981. The swap contract is an agreement to swap or exchange cash flows at specified intervals. The swap dealer is an important part of the swap market because unlike a futures contract, there is no standardized or organized exchange available in swaps. Hence, a swap dealer is any person who makes the market in swaps.

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