What is a total return swap


Response to the following questions:

1. Explain the similarity between a swap and a forward contract.

2. Distinguish between a swap seller and a swap buyer.

3. Give two reasons why credit swaps have been the fastestgrowing form of swaps in recent years.

4. What is a total return swap?

5. How does a pure credit swap differ from a total return swap?

6. Why is the credit risk on a swap lower than the credit risk on a loan?

 

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Accounting Standards: What is a total return swap
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