A. swaps
B. interchange
C. exchange
D. index
✅ The correct answer is option A.
Agreement between two parties to exchange cash flows in future and cash flows are based on underlying instruments is classified as swaps. A swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments.
Agreement between two parties to exchange cash flows in future and cash flows are based on underlying instruments is classified as swaps. A swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments.