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Question

How would you define a currency swap?
  • The use of a foreign currency to purchase goods or services in another country
  • The exchange of one currency for another currency at an agreed-upon rate
  • The exchange of one type of currency for another type of currency
  • None of the above
Answer- B
Currency swaps involve two parties agreeing to exchange one currency for another at a pre-agreed rate. This process essentially involves trading one currency for another.